On March 10th, the House of Representatives voted 220–211 to approve the Senate version of a $1.9 trillion coronavirus relief bill, the American Rescue Plan Act of 2021 (the Act). President Biden is expected to sign the Act into law by March 14th, when the current federal supplement to unemployment benefits expires for millions of Americans.
Several notable changes were made to the plan initially shared by the Biden administration in January: narrowing eligibility for stimulus checks; reducing unemployment benefit extensions; addressing student loan forgiveness and removing the provision to increase the federal minimum wage to $15/hour.
Following is a brief overview of the legislation. The GBQ team will provide more details about specific provisions of the Act in the coming days and weeks as more information becomes available.
Direct Assistance to Individuals
- Stimulus checks of up to $1,400 per person will be paid to individuals earning less than $75,000 of adjusted gross income, heads of households earning less than $112,500 and married couples earning less than $150,000. Families will receive an additional $1,400 per child. The payments phase out as income increases. Individuals who earn $80,000 a year, heads of households who earn $120,000 and married couples who earn $160,000 will be phased completely out of the third round of stimulus payments, including the per child payments.
- Unemployment assistance will be extended to provide a $300 federal supplement to weekly state unemployment payments. Additionally, the Pandemic Unemployment Assistance program, which provides benefits to self-employed workers and freelancers, will be extended. Benefits will now be available through September 6th.
- Nutrition assistance includes an increase in food stamp benefits through September 2021, additional funding for WIC and continued funding to families whose children’s schools are closed to replace the free and reduced-price lunches that children would have otherwise received through the summer.
- Economic Injury Disaster Loans will receive another round of $15B in funding through the Small Business Administration (SBA) for long-term, low-interest loans.
- Grants for restaurants and bars of up to $10M for eligible businesses to use toward a variety of operating expenses.
- The Paycheck Protection Program also gets additional funding of $7B and more non-profit organizations will be eligible.
- A new Community Navigator Program will help with outreach to target eligible businesses so that they may take advantage of these federal programs.
Individual Tax Provisions
- Expanded child tax credits of $3,600 per child for children under six and $3,000 for children under age 18. (Current law provides a credit of up to $2,000 per child under 17). The child tax credit enhancement will be available to single filers with annual incomes up to $75,000 and joint filers making up to $150,000. The credit will be fully refundable so that low-income parents can take advantage of it, and payment of the credit will be monthly, rather than once a year when filing a tax return.
- An expansion of the earned income tax credit for low-income workers, which nearly triples the maximum credit and extends eligibility to more people.
- Reduced taxability on unemployment income. The first $10,200 of unemployment benefit payments will be tax-free for households with annual incomes less than $150,000 in 2020 – a retroactive provision.
- Paid sick and family leave provisions included in the Families First Coronavirus Relief Act expired in December 2020. While no longer mandatory, tax credits will be available to employers who voluntarily choose to continue the paid leave provisions through October 1, 2021.
Assistance to Governments and Institutions
- State aid of $350B to states, municipalities, territories and tribal governments.
- Housing aid of $40B to state and local governments to assist low-income households with rent and utility assistance, to help homeowners who are struggling to pay mortgages, property taxes and utilities, and funding to assist those at risk, and experiencing homelessness.
- Education and child care support of more than $205B, ranging from funding for public and private schools return to classrooms to emergency financial aid grants for college students, and operating subsidies for colleges and child care providers.
- Medicaid and health insurance funding covers a wide range of programs, including increased subsidies for premiums for Affordable Care Act policies to full premium subsidies for laid-off workers currently on COBRA coverage through employer health insurance plans. Medicaid matching funds are increased to provide an incentive for states that have not yet expanded coverage to low-income adults.
- Vaccines and testing are prioritized, with more than $60B for research and development, testing, contact tracing, mitigation and distribution activities, as well as hiring 100,000 public health workers to support the COVID-19 response. An additional $50B will go to FEMA toward expanded vaccination initiatives.
- Rural healthcare assistance of $8.5B to struggling hospitals and healthcare providers.
For more information on how these provisions may benefit you or your business, please contact your GBQ representative.
Article written by:
Darci Congrove, CPA