Yesterday, the House voted to approve the $1.9 trillion American Rescue Plan, and the president is expected to sign the bill Friday.
New stimulus payments
The bill contains $1,400 direct payments that should begin hitting accounts this month. The full amount will go to those with adjusted gross incomes of up to $75,000 for single filers and $150,000 for married filing jointly, and is capped at incomes of $80,000 and $160,000, respectively. Dependents of all ages will be eligible. Previous dependent payments only included those under 17; this new one has been expanded to cover dependents such as college students or elderly relatives. Your most recently filed tax return will be used to determine eligibility, including 2020 if you have already filed. Most payments will be sent by direct deposit, and the rest by mail in the form of either debit cards or checks.
Expansion of the Child Tax Credit
The child tax credit will be temporarily expanded for one year, increasing the amount from $2000 to $3000 for children ages 6-17 and to $3600 for children under 6. Phaseouts begin at an AGI of $75,000 for single filers and $150,000 for married filing jointly. Families will not have to wait until filing their 2021 tax return to feel the benefit. Those eligible can receive half of their credit as periodic payments beginning in July through the end of 2021. The legislation also directs the IRS to create an online system for taxpayers to opt out of the advance payments. Update: If you wish to opt-out of the advance payments you can now do so on the IRS website. Both spouses on a joint return must unenroll individually for their half of the credit.
Making the new expanded credit permanent beyond 2021 is on the wish list of the president and Congressional Democrats and may come up in future legislation.
Unemployment Benefits Extension and Tax Waiver
The current federal unemployment benefits boost of $300 per week is extended until September 6, 2021. Also included is a retroactive waiver on federal taxes for the first $10,200 of 2020 unemployment benefits for households with incomes below $150,000. If you received unemployment benefits in 2020 and have already filed your 2020 taxes, you may need to submit an amended return. The IRS is expecting to issue guidance on the matter after the president signs the bill. Update: The IRS will be issuing refunds automatically for any paid unemployment taxes waived by the new bill. If you filed for 2020 before the bill went into effect there is no need to submit an amended return. You can expect a refund to arrive in the coming months.
Student Loan Forgiveness Made Non-Taxable
Any student loan forgiveness passed between December 31, 2020 and January 1, 2026 will not be treated as federal taxable income.
Paycheck Protection Program Reinfusion
The bill includes $7.25 billion in additional funds for the small-business loan program, but the current end date for the program remains March 31st. An expanded group of nonprofits are also now eligible.
Family and Sick Leave Credits Extended
The credits for sick and family leave originally enacted by the Families First Coronavirus Response Act were extended to September 30, 2021. The refundable credits compensate employers for coronavirus-related sick leave and family and medical leave.
Health Insurance Relief
COBRA insurance usually comes with a hefty price tag, with the eligible worker responsible for up to 102% of the entire premium. Under the relief bill, the government will subsidize 100% of the cost from April 1 through September 30 (via a tax credit for employers) for those who have lost their job or had hours cut.
Covid-19 Vaccination Program and Testing
$60 billion has been allocated towards Covid vaccine distribution and administration, testing, enhanced contact tracing, and laboratory expansions.
Eviction and foreclosure moratoriums were not extended beyond their current March 31st date, but the legislation does provide $25 billion in rental assistance, $5 billion in emergency housing vouchers, and $4.5 billion in utility assistance funding.
Extends a 15% increase in food stamp benefits through September 30, 2021
$39 billion in childcare grants
$130 billion to aid K-12 schools in reopening safely
$40 billion in aid to colleges and universities, half of which must be used for emergency grants to students
$350 billion in aid to states, cities, tribal governments, and US territories to cover costs incurred during the pandemic
$28 billion in grants for restaurants and bars
You can find the full text of the bill at Congress.gov.