Congress Passes $1.9T COVID Relief Bill. Here’s What’s in the American Rescue Plan

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:  

INDIVIDUALS

  • 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.

BUSINESSES

  • Allows for extension of the Employee Retention Credit through the end of 2021.
  • Extension of sick and family leave credit to September 30, 2021.

oTHER PROVISIONS 

  • $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

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