Another round of COVID relief is coming to Americans as President Biden signed the $1.9 trillion relief package on Thursday, March 11. Much of the legislation mirrors the plan laid out by Biden in January however there are three significant changes to that plan; lowered eligibility for the stimulus checks, reduced the federal boost to unemployment benefits, and eliminated an increase in the federal minimum wage to $15 an hour. The House first passed H.R. 1319 also known as the American Rescue Plan Act of 2021 on February 27. The bill was then sent to the Senate who made several revisions to the bill and then sent it to the House on March 6 who passed the final version on March 10. Below is a summary of the key provisions within the new law.
Key Provisions of the American Rescue Plan Act of 2021
Checks for up to $1,400 per person began being deposited or mailed over the weekend. The full amount goes to individuals earning less than $75,000 of adjusted gross income, heads of households (like single parents) earning less than $112,500 and married couples earning less than $150,000. But then the payments phase out as income goes up much faster than previous stimulus payments.
Individuals who earn at least $80,000 a year, heads of households who earn at least $120,000 and married couples who earn at least $160,000 will be completely cut off from this round of stimulus payments, regardless of how many children they have.
Small Business Assistance
The bill provides $15 billion to the Emergency Injury Disaster Loan program, which provides long-term, low-interest loans from the Small Business Administration. Severely impacted small businesses with fewer than 10 workers will be given priority for some of the money.
It also provides $25 billion for a new grant program specifically for bars and restaurants. Eligible businesses may receive up to $10 million and can use the money for a variety of expenses, including payroll, mortgage and rent, utilities and food and beverages.
The Paycheck Protection Program, which is currently taking applications for second-round loans, would get an additional $7 billion and the bills would make more non-profit organizations eligible.
Another $175 million would be used for outreach and promotion, creating a Community Navigator Program to help target eligible businesses.
The bill calls for providing a $300 federal boost to weekly jobless payments and extending two key pandemic unemployment benefits programs through September 6, 2021. It will also make the first $10,200 worth of benefits payments tax-free for households with annual incomes less than $150,000.
Child Tax Credit
In an effort to combat poverty, lawmakers are expanding the child tax credit to $3,600 for each child under 6 and $3,000 for each child under age 18. Currently, families can receive a credit of up to $2,000 per child under age 17.
The enhanced portion of the credit will be available for single parents with annual incomes up to $75,000 and joint filers making up to $150,000. The credit will also become fully refundable so more low-income parents can take advantage of it. Families can receive payments monthly, rather than a lump sum once a year, which is aimed at making it easier for them to pay the bills.
Earned Income Tax Credit
The package also enhances the earned income tax credit for workers without children by nearly tripling the maximum credit and extending eligibility to more people. The minimum age to claim the childless credit will be reduced to 19, from 25, and the upper age limit will be eliminated. This is the largest expansion to earned income tax credit since 2009.
Student Loan Forgiveness
Any eligible student loans forgiven by the government would no longer be taxable. Formerly, any student loan debt canceled by the government was considered taxable and levied at the borrower’s normal income tax rate. Before the relief bill passed, either forgiveness plan would have hit borrowers with a big tax bill. For example, $10,000 in cancellation would trigger an extra $2,000 in taxes for the average borrower. If $50,000 per borrower was canceled, the average person would have to write the IRS a check for $10,000.
Vaccines, Testing, and Hospital Assistance
Researching, developing, distributing, administering, and strengthening confidence in vaccines have been allocated $14 billion of the new legislation. It will also put $47.8 billion toward testing, contact tracing, and mitigation, including investing in laboratory capacity, community-based testing sites, and mobile testing units, particularly in medically underserved areas. It also allocates $7.7 billion to hire 100,000 public health workers to support coronavirus response.
In addition, the package provides $50 billion to the Federal Emergency Management Agency, with some of the funds going toward expanding vaccination efforts. The bill allocates $8.5 billion to help struggling rural hospitals and health care providers.
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