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On March 11, 2021, President Biden signed into law the American Rescue Plan Act of 2021, a $1.9 trillion coronavirus relief package that has forced lawmakers on both sides of the aisle to make concessions to pass the legislation.
The American Rescue Plan Act includes the following key items:
The legislation includes $25 billion to help restaurants that are struggling from pandemic lockdowns and closures as well as $1.25 billion for venue operators. The bill also includes $15 billion for targeted Economic Injury Disaster Loans and an additional $7.25 billion for forgivable loans in the Small Business Administration’s Paycheck Protection Program.
The Act extends the enhanced version of the Employee Retention Tax Credit through the end of 2021 so taxpayers can claim the credit in the third and fourth quarters of the calendar year. It also makes employers launching a trade or business after February 15, 2020, eligible for the credit if gross receipt over the prior three years do not exceed $1 million.
The Families First Coronavirus Response Act required employers with fewer than 500 employees to provide COVID-19 paid sick and expanded family medical leave, but also created 100% tax credits to fully offset the cost.
The paid leave requirements originally expired on December 31, 2020, but the American Rescue Plan Act extends the credits without the leave requirements for certain paid leave through October 21, 2021, with some modifications.
Stimulus payments include $1,400 per eligible individual. Single tax filers earning up to $75,000 will get the full amount; the payments gradually decrease above that income level and phase out completely at the income cap of $80,000.
Couples who file jointly and make up to $150,000 per year will get $2,800 — $1,400 per person — with the payments declining at higher incomes and zeroing out altogether at $160,000. Children and adult dependents in those households are also eligible for $1,400 payments. These checks are tax free.
The American Rescue Plan Act extends the weekly federal unemployment benefit of $300 per week through September 6, 2021. The stimulus package also extends benefits for self-employed individuals and gig workers, along with those who have exhausted their regular jobless benefits.
It also includes tax relief on the first $10,200 in unemployment payments for workers in households earning up to $150,000 per year. The change will prevent many people from receiving surprise IRS bills this spring.
The act temporarily increases subsidies for people who purchase health insurance coverage on a government marketplace. People who have lost their jobs can choose to extend coverage under their former employer through COBRA, which is expensive. The legislation will cover 100% of COBRA premiums from April 1 through September 30 for laid off workers.
The legislation expands tax credits for low- and middle-income families and makes them refundable for 2021.
It also temporarily expands the child tax credit, which is normally $2,000 for each child ages 6 to 17, to $3,000. Under the legislation, children age 5 and younger would be eligible for $3,600. The credit will be available to those with adjusted gross incomes of $75,000 for individuals, $115,000 for single heads-of-household, and $150,000 for couples. The tax credits would be sent to households monthly starting in July.
The bill also includes $25 billion for a stabilization fund to help open child-care centers and $15 billion in grants to support essential workers in meeting childcare costs.
Eviction and foreclosure moratorium are extended through September. The legislation provides $45 billion to help low-income households who have lost jobs pay rent, mortgages, and utility bills. The plan would also provide $5 billion to states and localities to offer emergency housing for families facing homelessness.