Since March 2020, two bills have directly impacted most taxpayers — the CARES Act and Consolidated Appropriations Act. Now, the American Rescue Plan has passed, the first for President Joe Biden’s term, almost a year to the date that the world shut down. Each of the prior COVID-relief bills has focused on getting cash in taxpayers’ hands, and this bill is no different.
Here’s a closer look at some of the big-ticket provisions:
- Per person payment of up to $1,400 (including dependents). For single taxpayers with AGI up to $75,000 (completely phased out for single taxpayers with an AGI over $80,000). For married taxpayers who file jointly with AGI up to $150,000 (completely phased out for MFJ taxpayers with AGI over $160,000).
- Provides $300 a week in federal unemployment benefits through September 6 and makes the first $10,200 in unemployment benefits tax-free in 2020 for households making less than $150,000 per year. This is a change from the $400 a week included in the House original version of the bill.
- Allows the child tax credit to be fully refundable for 2021. The bill increases the amount of the credit to $3,000 per child ($3,600 for children under 6). This credit is subject to phaseouts. The IRS must estimate the taxpayer’s child tax credit and pay a monthly advance 1/12th of the annual estimated amount. Payments will run from July to December 2021.
- Increase to Earned Income Tax Credit and the Child and Dependent Care Credit.
- Allows for extension of the Employee Retention Credit through the end of 2021.
- Extension of sick and family leave credit to September 30, 2021.
- $350 billion for state, local, and tribal governments to deal with the economic hardship of the pandemic
- $130 billion for schools, including funding for protective equipment and ventilation
- $40 billion for public colleges, half of which must be passed on to students through financial aid
- $50 billion for COVID testing and contact tracing
- $25 billion for restaurants and bars
- $350 billion for state and local governments
- $90 billion towards transportation and infrastructure
- $30 billion for emergency rental assistance