Investing

After saving money into pretax retirement accounts, you will eventually face mandatory withdrawals, known as required minimum distributions, or RMDs.
While many worry about the tax hit, RMDs could offer a chance to improve your portfolio, experts say. 
You could use RMDs to rebalance your asset allocation or adjust your tax location for future growth.

Richard Drury | Digitalvision | Getty Images

After funneling money into pretax retirement accounts, you will eventually face mandatory withdrawals in retirement known as required minimum distributions, or RMDs.
Since RMDs can trigger higher taxes, the withdrawals can be a nuisance for some retirees who do not need the money. But the yearly activity could offer a chance to improve your portfolio, experts say. 

“Ultimately, you look at your portfolio and say, what do I want to trim?” said certified financial planner Matthew Saneholtz, chief investment officer and senior wealth advisor at Tobias Financial Advisors in Plantation, Florida.
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Since 2023, most retirees need to begin RMDs by age 73, based on changes enacted by Secure 2.0. That age jumps to 75 starting in 2033.
While the annual RMD deadline is Dec. 31, you will have until April 1 after the year you turn 73 to make your first RMD. If you skip yearly RMDs or do not take enough in a given year, there is a 25% penalty on the amount you should have withdrawn.

Rebalance your investments

Your asset allocation, or investment mix, drifts throughout the year as markets move. But you can use RMDs to shift assets back to your intended percentages, based on risk tolerance, goals and timeline.

“Every client in my practice has a target asset allocation, so I sell a holding from whichever asset class or classes they happen to be overweight in at the time,” which is typically U.S. stocks, said CFP Paul Winter, president of Five Seasons Financial Planning in Salt Lake City, Utah.

Every client in my practice has a target asset allocation, so I sell a holding from whichever asset class or classes they happen to be overweight at the time.

Paul Winter
President of Five Seasons Financial Planning

As you weigh assets to sell, you should avoid selling investments when they are down to avoid the so-called sequence of returns risk, which can shrink your portfolio over time, experts say.
Withdrawing assets during stock market downturns could mean selling more investments for the same-sized RMD. That could leave fewer investments to capture future growth when the market rebounds.

Shift your ‘tax location’

You can also use RMDs to adjust your “tax location,” or the types of investments in certain accounts to minimize future levies, Saneholtz said.  
Withdrawals from pretax retirement accounts incur regular income taxes, depending on your federal bracket, and brokerage accounts are subject to capital gains taxes. Meanwhile, Roth accounts generally grow tax-free.
If you do not need the RMD, you could use funds to reinvest in a brokerage account. While the move would not reduce current-year taxes, future asset growth could have more favorable capital gains tax treatment.

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Although student loan debt is already an all-time high, college students are borrowing more for the coming year, according to a recent report.
Debt cancellation expectations may be factor.

Although the fate of federal student loan forgiveness is up in the air, college students may be borrowing more for the coming year in part because of the expectation that their debt may get forgiven, recent research suggests.
With few families able to shoulder the sky-high tuition tab, students and their parents are increasingly leaning on student loans, according to Sallie Mae’s annual How America Pays for College report. Roughly half of families, or 49%, reported borrowing for college for the 2023-24 academic year, up from 41% the year prior. Sallie Mae surveyed 1,000 parents of undergraduate students and 1,000 undergraduate students ages 18 to 24 this spring.

Education debt, which now exceeds $1.7 trillion, is at an all-time high. Over the past 15 years, the total balance has more than doubled, even outpacing the rising cost of college.

Nearly half — 48% — of student loan borrowers anticipate debt forgiveness after they finish college, Sallie Mae also found. Of those who expect forgiveness, 37% plan to work in public service, while 7% say their future employer will pay for their loans. The biggest share, 47%, think the government will forgive student loans.
“Borrowing is up; at the same time, half of students expect their loans to be forgiven,” said Rick Castellano, a spokesperson for Sallie Mae. “You have to wonder, is there a correlation there?”
If the expectation is that loans are going to be forgiven, that could encourage more borrowing, he said.
According to a separate report by NerdWallet, 31% of student loan borrowers have slowed their repayments because they hope to see their loans reduced or forgiven by the federal government and 23% have stopped their student loan payments altogether for the same reason. NerdWallet polled more than 600 adults with student loans in July.

It’s still too soon to get an accurate read on how expectations of federal student loan forgiveness may filtering down to decisions about education debt, according to Sameer Gadkaree, president of the Institute for College Access and Success, a nonprofit organization that promotes college affordability.
“Given that the debt relief plans have been tied up in courts, it’s unclear how that would affect student borrowing,” he said.

The status of student loan forgiveness

‘A confusing climate’ for borrowers

“With so much litigation pending, it’s a confusing climate for student loan borrowers,” said NerdWallet loans expert Kate Wood.
For borrowers taking on new debt, consider both choice of major and future earnings potential, experts often say. Often, a good rule of thumb is not to borrow more than you expect to earn as a starting salary.
Most experts also caution against taking on student loan debt you may not be able to afford in anticipation that it will be wiped out.
For those struggling with existing debt, there are ways federal borrowers can reduce their burden, including economic hardship and unemployment deferments, while the income-based student loan repayment plan, known as SAVE, is currently on hold.
“Those considering repayment options should try to find the best option for them based on what’s available now, not on what they think might happen in the future,” Wood said.
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Vice President Kamala Harris is calling for the forgiveness of medical debt for millions of Americans.
People in the U.S. owe at least $220 billion in medical debt, a February KFF analysis found.

Vice President Kamala Harris addresses the Democratic National Convention at the United Center in Chicago on Aug. 19, 2024.
Tom Williams | CQ-Roll Call, Inc. | Getty Images

Vice President Kamala Harris wants to forgive medical debt for millions of Americans.
The economic plan Harris rolled out last week notes that the Democratic presidential nominee and her running mate, Minnesota Gov. Tim Walz, would work with states to relieve people of their medical debt and “to help them avoid accumulating such debt in the future, because no one should go bankrupt just because they had the misfortune of becoming sick or hurt.”

Some 15 million Americans have medical bills on their credit reports, according to Consumer Financial Protection Bureau research published in April. People in the U.S. owe at least $220 billion in medical debt, a February KFF analysis found.
“Medical debt affects an enormous number of people, so it’s an issue that resonates with voters,” said Larry Levitt, executive vice president for health policy at KFF.

Indeed, 51% of adults say it is extremely or very important for the federal government to forgive medical debt, compared with 39% who said the same about student loan debt, according to a May poll conducted by the University of Chicago Harris School of Public Policy and The Associated Press-NORC Center for Public Affairs Research. The groups surveyed 1,309 adults.
“Vice President Harris may see student loan forgiveness and medical debt forgiveness as both addressing inequities that prevent people from achieving the American dream,” said higher education expert Mark Kantrowitz.
The Harris campaign did not respond to a request for comment.

Former President Donald Trump hasn’t come out with a medical debt cancellation proposal, but as president he pushed for more price transparency for patients and to curb surprise medical bills.
The Trump administration also tried but failed to repeal the Affordable Care Act. Overturning even portions of that law would lead to more Americans becoming uninsured and higher premium costs for policyholders, according to an estimate by the Congressional Budget office.

Harris differentiates herself with focus on medical debt

By coming out with a medical debt forgiveness plan, Harris may be looking to differentiate herself from President Joe Biden and his student debt efforts, said Braxton Brewington, press secretary for the Debt Collective, an organization that advocates for debt cancellation.
Biden has forgiven more student debt than any other president.
“She has the freedom to move into another space,” Brewington said, adding that Harris would likely continue Biden’s work on student debt, as well.
“I’m sure she’ll do both,” he said.
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The American health-care system has long been on Harris’ radar.
As a presidential candidate in 2020, Harris pushed for a version of “Medicare for All,” a plan she no longer backs as she shifts to the center of her party. But Harris continued to show a concern with health-care costs as vice president, leading a White House effort in June to clear medical bills from Americans’ credit reports.
This focus may come, in part, from her own experience.
In a 2019 interview with the late activist Ady Barkan, Harris described the day her mother informed her she had cancer.
“My mother, she said to my sister and me, ‘I want to meet you guys for lunch,’ and she showed up at the restaurant wearing makeup — my mother never wore makeup, and her hair was blow dried,” Harris said, tearing up. “She took our hands, and she’d said she’d been diagnosed with colon cancer.
“That was one of the worst days of my life, truly.”
That families experiencing this “would also have to worry about how to pay the bills,” Harris told Barkan was “just inhumane.”
Harris’ mother, who was a cancer researcher, died in 2009 at 70.

How medical debt could be canceled

Harris’ economic plan didn’t include specific details on how the medical debt jubilee would happen, but experts say an investment by the government would go far.
“Amazingly, medical debt can be bought from collection agencies for a penny on the dollar, a reflection of the fact that so few people can afford to pay their overdue medical bills,” KFF’s Levitt said.
Allison Sesso, president and chief executive officer of Undue Medical Debt, a nonprofit that partners with local governments to cancel people’s medical debts, said the group can usually wipe out around $1,000 of the debt for every $10. It often buys the debt directly from hospitals, Sesso said.
States, counties and cities across the U.S. are already using funds from the American Rescue Plan passed during the Covid pandemic to purchase and eliminate around $7 billion in medical debt for roughly 3 million Americans by the end of 2026. As many as 1 million residents in Arizona could benefit, for example, and 400,000 people in New Jersey, according to the White House.

Medical debt affects an enormous number of people, so it’s an issue that resonates with voters.

Larry Levitt
executive vice president for health policy at the Kaiser Family Foundation

Recent research has raised some doubts about the benefits of forgiving medical debt. The relief has no impact on people’s mental health, credit access or financial distress, according to a National Bureau of Economic Research study published in April.
Experts say this may be due in part to the fact that, beginning last year, the major credit reporting companies cleared most medical collections under $500 from people’s records. Those past-due bills are now less likely to affect people’s credit. Harris is now trying to get even more, if not all, medical debts off people’s credit reports.
However, Sesso said Undue Medical Debt hears from people all the time about how canceling their medical debt improved their lives. In extreme cases, unpaid medical bills can lead to wage garnishments and seized assets, she said.
Frequently, people who still owe a hospital or doctor a bill will avoid necessary treatments, she said.
“People don’t go back to the doctor because they feel they’ll be asked for the bill,” Sesso said. “And then the problem gets worse, and the interventions much more expensive.”

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Traders work on the floor of the New York Stock Exchange during morning trading on August 20, 2024 in New York City.
Michael M. Santiago | Getty Images

Stocks @ Night is a daily newsletter delivered after hours, giving you a first look at tomorrow and last look at today. Sign up for free to receive it directly in your inbox.
Here’s what CNBC TV’s producers were watching as stocks’ comeback rally took a break on Tuesday and what’s on the radar for the next session.

Elliott Management

On Wednesday, CNBC’s Leslie Picker will go in depth on some of Elliott Management’s recent activist campaigns.
The firm has become perhaps the most active of activists with several big investments in the last few months.
We learned on May 28 that Elliott bought into Texas Instruments. The stock is up 1.7% since then.
On June 10, we found out Elliott Management was buying into Southwest Airlines and that the investor was pushing for a course correction. The stock is down 4.4% since then.
On July 19, we learned about Elliott Management building a stake in Starbucks. The stock is up 16% since then. However, the coffee company also hired Brian Niccol as its new CEO, which likely counts for most of the gain in the shares. The stock was up nearly 25% on Aug. 13, the day Starbucks announced Niccol would take the helm.
The dates above represent when we found out about the investments. Elliott’s positions may be up more or down more since it started buying into the stocks listed.

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Year-to-date performance of Starbucks

The S&P 500’s streak

Hitting highs

Netflix hit an all-time high on Tuesday. The stock went public in May 2002. Netflix is up 73% in a year. It is up nearly 8% in a week.
Walmart also hit a new all-time high. The stock listed in August 1972 — 52 years ago. The stock is up 9.4% in the last week.
Eli Lilly hit an all-time high Tuesday. The stock went public in 1952. Lilly is up 63% so far in 2024 and up 18% in August.
Thanks to CNBC data teamer Chris Hayes for moving all these numbers.

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Eli Lilly in 2024

Target

The retail giant reports on Wednesday morning.
The stock is down nearly 8% in the past three months.
Target is 20.6% from the April high.

Macy’s

The shopping giant reports quarterly numbers before the bell Wednesday.
Macy’s is down 7% in the past three months.
The stock is 20% from the March high.

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Macy’s performance over the past year

TJX

This retail reports Wednesday morning before the bell.
The stock is up 16% in the past three months.
TJX is just off the July 12 high.

Snowflake

This data cloud company reports Wednesday after the bell.
The stock is 44.5% from the 52-week high in February.
Snowflake is up nearly 4% in a week. More

Vice President Kamala Harris called for the construction of 3 million new housing units, both for rent and for sale, over the next four years.
Other proposals include tax incentives to build more homes and down payment assistance for first-time buyers.

Democratic presidential candidate Vice President Kamala Harris speaks at an Aug. 10 campaign rally in Las Vegas.
Justin Sullivan | Getty Images News | Getty Images

Supply is housing policy’s ‘bipartisan sweet spot’

“The bipartisan sweet spot around the housing affordability challenges that we have today is on increasing supply,” said Dennis Shea, executive director of the Bipartisan Policy Center’s J. Ronald Terwilliger Center for Housing Policy.
Ever since the foreclosure crisis, a major period of property seizures in the U.S. between 2007 and 2010, there have been far fewer new single-family homes and multi-family rental buildings under construction, said Janneke Ratcliffe, vice president of the Housing Finance Policy Center at the Urban Institute, a non-profit think tank in Washington, D.C.

There’s “a more acute shortfall” when it comes to affordable homes, she said, whether for renters looking for quality rental units or first-time buyers.

To get to those 3 million new units, a Harris-Walz administration would introduce a “first-ever tax incentive” for homebuilders who sell starter homes to first-time homebuyers, according to the proposals unveiled last week. 
The initiative would complement the Neighborhood Homes Tax Credit, according to the announcement, which would be created by a bill pending in Congress called the Neighborhood Homes Investment Act.
Shea said the tax credit, which “has strong bipartisan support,” would promote the creation and rehabilitation of starter homes for sale in distressed communities.

My conclusion is that [Harris’] housing plan would be worse than doing nothing.

Edward Pinto
senior fellow and codirector of the American Enterprise Institute’s Housing Center

Former President Donald Trump has also talked about ways to increase housing supply as part of his presidential campaign proposals.
“We’re going to open up tracks of federal land for housing construction,” Trump said in an Aug. 15 press conference. “We desperately need housing for people who can’t afford what’s going on now.”
But Edward Pinto, senior fellow and codirector of the American Enterprise Institute’s Housing Center, said it’s “much, much harder” for the government to pass “supply-side proposals,” compared with efforts that generate demand by making homebuying easier for consumers.
“My conclusion is that [Harris’] housing plan would be worse than doing nothing,” he said.

‘It’s hard to define what a starter home is’

It will be important for Harris to clarify what she means by “starter home,” said James Tobin, CEO of the National Association of Home Builders.
“It’s hard to define what a starter home is,” said Tobin, as underlying costs make it hard to keep building expenses low.
“In most markets in the country, it’s hard to build to that first-time home buyer because of labor costs, land costs, borrowing costs for a builder, and then material cost,” he said.

Defining a range of price points for a starter home will also be important, as it may vary widely across different markets, said Tobin.
“In California, a starter home might cost [$700,000] or $800,000, but in the South … it might only be $250,000 or $300,000,” he said.

The $40 billion innovation fund seems ‘very high’

The list of Harris’ proposals also includes a $40 billion innovation fund. The money would empower local governments to fund and support local solutions to build housing.
Yet some experts are skeptical it will fulfill the intended goal.
“The federal government doesn’t have a whole lot of authority over what happens at the local level,” said Redfin’s Fairweather. “It’s up to the local planning commissions whether they’re going to allow for more housing in order to get that [innovation fund] money.”
“But time and time again, locals and local governments, local homeowners ignore incentives because they’re so resistant to building more housing,” Fairweather said.
Additionally, the $40 billion housing innovation fund may be too expensive, making it unlikely to get bipartisan support, Shea said.
“The price tag there seems very high,” he said. “I don’t know if the market could bear that price tag in Congress.”

Aid for first-time homebuyers has less support

Harris proposes to provide $25,000 down-payment assistance to first-time homebuyers who have paid rent on time for two years, with more generous support for qualifying first-generation homeowners.
The proposal stems from an idea the Biden-Harris administration presented earlier this year, which called on Congress to implement $25,000 in down-payment assistance exclusively for 400,000 first-generation buyers, or first-time buyers whose parents weren’t homeowners, and a $10,000 tax credit for first-time buyers.

Harris’ blueprint would apply to all first-time buyers and broaden the reach to more than 4 million qualifying applicants over four years.
But “there’s just not a lot of bipartisan support,” Shea said.
During an Aug. 16 appearance on Fox Business, Sen. Tim Scott, R-S.C., said Harris’ $25,000 down payment assistance “will only make the demand higher with the supply not moving, which means that prices will go up, fewer people are going to be able to afford it.”
“And frankly, unless they’re going to embed financial literacy in any program, it only means there will be a higher level of default,” said Scott.
To help renters, Harris addressed two pending pieces of legislation. She called on Congress to pass the Stop Predatory Investing Act, a bill that calls for removing key tax benefits for those who own 50 or more single-family properties. This initiative would curtail major investors from buying up large sums of single-family rental homes.
Meanwhile, the Preventing the Algorithmic Facilitation of Rental Housing Cartels Act would crack down on companies who use algorithmic systems to fix market rent prices. More

With federal student loan forgiveness up in the air and the rising cost of college now a top concern for families, parents are reprioritizing saving for higher education, recent studies show.
Families are increasingly taking advantage of 529 college savings plans, which have even more benefits as of 2024.
Yet only 30% of parents are on track to reach their savings goals, according to Fidelity.

Kathryn Bracho, 48, with her husband, Michael, and their two sons, Declan and Taran.
Courtesy: Kathryn Bracho

With federal student loan forgiveness in jeopardy and the rising cost of college now a top concern for students and their families, more Americans are prioritizing saving for higher education.
In 2024, 74% of parents surveyed have started putting money away for college, according to Fidelity’s College Savings Indicator — a spike from 58% in 2007, when the study was first conducted. Fidelity polled nearly 2,000 families with children high school age and younger between April and May. 

“My husband and I just kept hearing from people with older kids about just how expensive college is,” said Kathryn Bracho, 48, who lives in Green Bay, Wisconsin.
Bracho and her husband, Michael, started contributing to college savings accounts in 2017 so their sons — Declan, 15, and Taran, 12 — would have options after high school, she said.
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“I don’t know that we have as much as we had hoped, but just the fact that we’ve been steadily contributing gives me a certain degree of reassurance,” she said. “They’ll have to take out some loans but it hopefully won’t be that crushing burden.”
To be sure, sky-high costs and concerns over ballooning student loan balances have weighed heavily on considerations about college for students and their parents.

“Families are beginning to row together in the same direction and realize the value of higher education and what they want to get out of higher education,” said Chris McGee, chair of the College Savings Foundation, a nonprofit that provides public policy support for 529 plans.
“Nobody wants to be part of the $1.7 trillion,” McGee said, referencing the total amount of outstanding student loan debt.

How savings plays into covering college costs

David Ochs, a physician in Richmond, Virginia, owed $315,000 in education loans by the time he finished his residency. “It’s been miserable,” the 39-year-old said.
Now as the father of two sons, ages 1 and 5, Ochs said he started saving for their college educations soon after they were born because he didn’t want them to experience the same hardship. “All of a sudden your life is all about trying to get out of a strangling debt.”
Still, contributing to their 529 plans has necessitated sacrifices such as forgoing extra payments toward his student loans, he added. “I think it’s a gesture of love.”

Among the 94% of parents funding their children’s higher education, almost half say that savings is their primary way of paying the tab, a new report by the College Savings Foundation found. The annual State of Higher Ed Savings survey polled more than 1,000 parents of children age 25 and younger in July. 
For the first time in the College Savings Foundation survey’s history, more than half of all parents said they are tapping a 529 college savings plan.
In 2024, total investments in 529s jumped to $450.5 billion in June, up nearly 10% from $412.5 billion the year before, according to data from the College Savings Plans Network, a network of state-administered college savings programs.

Financial experts and plan investors agree that 529 plans are a smart choice for many. And yet, in previous years, data shows that regular contributions to a 529 college savings plan often took a back seat to paying more pressing bills or daily expenses.
Even now, parents hope to use savings to pay for 67% of their child’s education, but only 30% are on track to hit that goal, Fidelity found.
“A college education is still valuable, but it’s the lack of planning that’s a little bit alarming,” said Tony Durkan, a vice president and head of 529 relationship management at Fidelity Investments.

The benefits of a 529 college savings plan

Among other recent changes, higher contribution limits and the flexibility to roll unused money into a Roth individual retirement account free of income tax or tax penalties have helped boost interest, McGee said.
The restrictions around 529s have also loosened to include continuing education classes, apprenticeship programs and even student loan payments.
“The legislative updates that have come through have certainly broken down barriers to entry to 529 plans,” Fidelity’s Durkan said.
Here’s a closer look at some of the changes:
New Roth IRA rollover rules
Thanks to Secure 2.0, as of 2024, families can roll over unused 529 plan funds to the account beneficiary’s Roth IRA without triggering income taxes or penalties. Among other qualifications, the 529 plan must have been open for at least 15 years.
That change follows the Secure Act of 2019, which let 529 users put some of the funds toward their student loan tab: up to $10,000 per year for each plan beneficiary, as well as another $10,000 for each of the beneficiary’s siblings.
Previously, tax-advantaged withdrawals were limited to qualified education expenses, such as tuition, fees, books, and room and board. Now, 529s offer much more flexibility, even for those who never go to college, Chris Lynch, president of tuition financing at TIAA, told CNBC last year.
In that case, you could transfer the funds to another beneficiary or withdraw them and pay taxes and a penalty on the earnings. If your student earns a scholarship, you can typically withdraw up to the amount of the scholarship penalty-free.
Higher maximum contribution limits
This year, parents can gift up to $18,000, or up to $36,000 if you’re married and file taxes jointly, per child without those contributions counting toward your lifetime gift tax exemption. That’s up from $17,000 and $34,000 for married couples filing jointly in 2023. 
High-net-worth families that want to help fund a family member’s higher education could also consider “superfunding” 529 accounts, which allows front-loading five years’ worth of tax-free gifts into a 529 plan.
In this case, you could contribute up to $90,000 this year, or $180,000 for a married couple. But then you wouldn’t be able to give more money to that same recipient within a five-year period without it counting against your lifetime gift tax exemption.
A larger lump-sum contribution upfront may potentially generate more earnings compared with the same-size contribution spread out over a few years because it has a longer time horizon, according to Fidelity.
New grandparent ‘loophole’
A new simplified Free Application for Federal Student Aid rolled out at the end of last year, with added benefits for grandparents who own 529 accounts for their grandchildren.
Under the old FAFSA rules, assets held in grandparent-owned 529 college savings plans were not reported on the FAFSA form, but distributions from those accounts counted as untaxed student income, which could reduce aid by up to half of that income.
As part of the FAFSA simplification, students no longer have to answer questions about contributions from a grandparent, effectively creating a “loophole” for grandparents to save for a grandchild’s college without impacting their financial aid eligibility.
Tax deductions or credits for contributions
Even before recent changes, there were already many advantages to a 529 plan. In more than half of all U.S. states, you can get a tax deduction or credit for contributions. Earnings grow on a tax-advantaged basis, and when you withdraw the money, it is tax-free if the funds are used for qualified education expenses.
A few states also offer additional benefits, such as scholarships or matching grants, to their residents if they invest in their home state’s 529 plan.

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As former President Donald Trump and Vice President Kamala Harris unveil their economic agendas, both candidates have called for tax changes that could affect millions of Americans.
The next president will face trillions in expiring tax breaks enacted by Trump via the Tax Cuts and Jobs Act of 2017.
Both candidates have proposed tax cuts and increases that require congressional approval.

Vice President Kamala Harris, left, and former President Donald Trump

As former President Donald Trump and Vice President Kamala Harris unveil their economic agendas, both presidential candidates have called for tax changes that could affect millions of Americans.
Taxes will be a key issue for the next president. Without action from Congress, trillions in tax breaks enacted by Trump via the Tax Cuts and Jobs Act, or TCJA, will expire after 2025. More than 60% of taxpayers could see higher taxes in 2026 without extensions, according to the Tax Foundation.

Expiring provisions include lower federal income tax brackets, a higher standard deduction, a bigger child tax credit and more generous estate and gift tax exemptions, among others.
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However, “there’s a gulf between the political rhetoric around the 2017 tax law and the policy reality that both parties are going to face next year,” said Andrew Lautz, associate director for the Bipartisan Policy Center’s economic policy program.
While Democrats have criticized elements of the TCJA, both parties will likely agree to extend trillions in tax cuts, he said. But negotiations could be challenging amid concerns about the federal budget deficit. 
Extending TCJA provisions and subsidized premiums for marketplace health insurance could increase federal deficits by nearly $5 trillion over 10 years, according to the Bipartisan Policy Center.

Here’s a breakdown of where each candidate stands on tax policy.

Plans to extend Trump’s tax cuts

Trump aims to preserve the individual and business tax cuts enacted via TCJA, the campaign said in a press release on Monday.
He addressed his tax agenda briefly during an event in York, Pennsylvania, on Monday, which countered the Democratic National Convention. During that speech, he promised “big tax cuts for families and small businesses.”
Harris hasn’t directly addressed TCJA extensions during her 2024 campaign. But President Joe Biden’s top economic advisor, Lael Brainard, in May voiced support for partial extensions.
“Achieving a fairer tax system also means we can’t extend expiring Trump tax cuts for those with incomes above $400,000,” Brainard said.
The Trump and Harris campaigns did not respond to CNBC’s request for comment.

Proposed tax increases

Both candidates have vowed to address the budget deficit and have proposed measures to raise revenue. But tax law changes must be approved by Congress, which could be challenging, depending on future House and Senate control.
The Harris campaign on Monday said she would push to increase the corporate tax rate to 28%, up from the 21% permanently enacted via the TCJA. The plan could reduce the deficit by $1 trillion over a decade, according to estimates from the Committee for a Responsible Federal Budget.
Meanwhile, Trump has called for sweeping tariffs, which are taxes levied on imported goods.
Trump’s proposed baseline 10% tariff and 60% levy on Chinese goods could reduce the average after-tax U.S. household income by roughly $1,800 in 2025, according to the Tax Policy Center.
During his event Monday, Trump pushed back on the assertion that tariffs would cost American consumers. “It’s a tax on a foreign country,” he said.

Tax cuts on tips, Social Security

Both campaigns have also floated eliminating income tax on tip income, pitching the idea at separate events in Nevada, a battleground state and service industry hotbed. Harris announced her plan Aug. 10, roughly two months after Trump introduced his.
Despite some bipartisan support in Congress, the idea has faced criticism from some policy experts who believe the measure could face administrative hurdles and possible abuse.

The big question for us as policy wonks is, what is the underlying policy rationale?

Garrett Watson
Senior policy analyst and modeling manager at the Tax Foundation

“The big question for us as policy wonks is, what is the underlying policy rationale?” said Garrett Watson, senior policy analyst and modeling manager at the Tax Foundation.
Trump has also called for no taxes on Social Security income. Social Security is a key issue for voters this election, according to a CNBC poll. CNBC surveyed 1,001 registered voters July 31-Aug. 4.

Child tax credit expansion

Harris on Friday announced an economic plan, including an expanded child tax credit worth up to $6,000 in total tax relief for families with newborn children, among other priorities.
Her plan came less than one week after Sen. JD Vance of Ohio, former President Donald Trump’s GOP running mate, floated a $5,000 child tax credit. 
A Trump campaign official told CNBC at the time: “Trump will consider a significant expansion of the child tax credit that applies to American families.” More

Tax credits under the Inflation Reduction Act have led to a boom in new manufacturing projects in the U.S.
GOP congressional districts and rural communities have benefited in particular.
The presidential election is creating uncertainty about the future of those projects, with some investors worried a Republican victory could weaken the IRA.

Monica Muñoz, top, and Denise Denning place black encapsulation material on solar panels at Elin Energys solar panel manufacturing facility on Thursday, April 25, 2024 in Brookshire. 
Brett Coomer | Hearst Newspapers | Getty Images

The Inflation Reduction Act has sparked a manufacturing boom across the U.S., mobilizing tens of billions of dollars of investment, particularly in rural communities in need of economic development.
The future of those investments could hinge on the outcome of the U.S. presidential election. The prospect of a Republican victory has shaken the confidence of some investors who worry the IRA could be weakened or in a worst-case scenario repealed.

Companies have announced $133 billion of investments in clean energy technology and electric vehicle manufacturing since President Joe Biden signed the IRA into law in August 2022, according to data from the Massachusetts Institute of Technology and the Rhodium Group.
Actual manufacturing investment has totaled $89 billion, an increase of 305% compared to the two years prior to the IRA, according to MIT and Rhodium. Overall, the IRA has leveraged half a trillion dollars of investment across the manufacturing, energy and retail sectors, according to the data.
“It is having a transformative effect within the manufacturing sector,” said Trevor Houser, a partner with the Rhodium Group. “The amount of new manufacturing activity that we’re seeing right now is unprecedented in recent history, and is in large part due to new clean energy manufacturing facilities.”
Some 271 manufacturing projects for clean energy tech and electric vehicles have been announced since the IRA passed, which will create more than 100,000 jobs if they are all completed, according to the advocacy group E2, a partner of the National Resources Defense Council. The investments sparked by the IRA have been a boon for rural communities in particular, Houser said.
“Unlike investment in AI and tech and finance, which is clustered in big cities, clean energy investment really is concentrated in rural communities, and is one of the brightest sources of new investment in those areas,” Houser said.

The IRA has also accelerated the deployment of renewable energy, with $108 billion in invested in utility-scale solar and battery storage projects. Investments in solar and battery storage have surged 56% and 130%, respectively, over the past two years, according to the Rhodium data.
“The more mature technologies, so like wind and solar generation, electric vehicles, those have achieved escape velocity,” Houser said. “They will continue to grow no matter what. It’s a question of speed.”

Trump threats to IRA

But the “manufacturing renaissance” is still in its early stages and remains fragile, Houser said. Without the IRA, the resurgence of new factories would not have taken off, said Chris Seiple, vice chairman of Wood Mackenzie’s power and renewables group.
Former President Donald Trump has threatened to dismantle the law as he advocates for more oil, gas and coal production.
“Upon taking office, I will impose an immediate moratorium on all new spending grants and giveaways under the Joe Biden mammoth socialist bills like the so-called Inflation Reduction Act,” Trump told supporters at a May rally in Wisconsin.
“We’re going to terminate his green new scam,” he said. “And we’re going to end this war on American energy — we’re going to drill, baby, drill.”

Clean energy stocks tumbled after President Joe Biden’s disastrous debate performance in late June, as investors worried that Trump and the Republicans are poised to sweep both the White House and Congress were growing more likely.
First Solar, the largest panel manufacturer in the U.S., saw growing constraints on access to capital in the second quarter for early stage solar companies as well as larger players that are trying to build out domestic manufacturing, CEO Mark Widmar told analysts on the company’s July 30 earnings call.
Investors are waiting to make decisions until they have a clearer view of what the policy environment will look like for the solar industry, Widmar said. Utilities and oil companies that were making investments in renewables are now considering a pivot to prioritize fossil fuel projects, he said.
The fear among some investors is that Republicans would will use the reconciliation process, through which bills can be passed with a simple majority, to roll back the IRA in order to finance making Trump’s 2017 tax cuts permanent.

Trump told Reuters Monday he would consider ending the $7,500 tax credits for electric vehicles. Consumers and business have spent $157 billion on zero-emission vehicles since 2022, double the amount before the IRA became law, according to Rhodium.
“Tax credits and tax incentives are not generally a very good thing,” the former president told Reuters in an interview when asked specifically about the EV credits after a campaign even in York, Pennsylvania.
Trump has not specifically called out the tax incentives that have supported the expansion of renewables. The former president’s campaign platform says Republicans will support energy production from all sources. The document backs oil, coal and natural gas as well as nuclear, but does not specifically mention solar or wind power.

Republican districts benefit most

Executives at renewable companies and analysts are betting the investment, production and manufacturing tax credits, which are driving much of the spending on clean energy and technology, would survive even a Republican administration.
A majority of IRA investment in new projects, 85%, has gone to GOP congressional districts, according to E2 data. And Trump’s campaign platform emphasizes expanding domestic manufacturing and bringing supply chains back to the U.S.
The dynamics of the presidential race have also changed since Biden ended his re-election bid, with Vice President Kamala Harris rising to a slight lead over Trump national polling averages as she formally accepts her party’s nomination at the Democratic National Convention in Chicago this week.

“We’ve seen an increase in the number of Republican lawmakers that are embracing the clean energy credits within the IRA as they see the positive impact to their states and communities, which is hard to turn away from,” John Ketchum, CEO of NextEra Energy, which operates the largest portfolio of renewable energy, told analysts on the company’s July 24 earnings call.
“And the tax laws are very difficult to overturn,” Ketchum said. “And we’re very likely to have thin margins in the House and the Senate, particularly in light of some of the recent developments,” he said, hinting at Harris’ rise as the new Democratic candidate.
Indeed, 18 Republican members of Congress warned House Speaker Mike Johnson earlier this month that repealing IRA energy tax credits would be bad for business.
“Prematurely repealing energy tax credits, particularly those which were used to justify investments that already broke ground, would undermine private investments and stop development that is already ongoing,” the Republican lawmakers wrote.
“A full repeal would create a worst-case scenario where we would have spent billions of taxpayer dollars and received next to nothing in return,” they wrote.
John Berger, CEO of rooftop solar installer Sunnova, told analysts on the company’s Aug. 1 earnings call the Trump trade that drove clean energy stocks lower might not have much more room to run.
“Clearly, this is a dead heat now,” Berger said of the presidential race. “I think that the old Trump trade and so forth, I would be very cautious on that.” More