An Overview of the American Rescue Plan Act's $1.9 Trillion Stimulus
"A trillion here, a trillion there, and
pretty soon you're talking real money."
Below is a breakdown of some important components to this recent legislation, including what business owners, families, and struggling individuals may need to know.
Unemployment Benefits
Eligible unemployed individuals may continue receiving an additional $300 in federal unemployment benefits through early September 2021.
Stimulus Checks
Similar to previous relief bills, eligible American taxpayers will be receiving direct stimulus payments of $1,400 as part of the new bill. Similar to previous checks, those with incomes up to $75,000 will receive $1,400 payments, while families with children will receive $1,400 per dependent. Married couples with an income of $150,000 or less will receive $2,800. So, the potential payments are higher than previous, BUT the income phaseout ranges are narrower.
Those phaseout ranges are as follows:
- Single Filers and Married Filing Separate: $75,000 – $80,000
- Head of Household: $112,500 – $120,000
- Married Filing Joint: $150,000 – $160,000
If your Adjusted Gross Income is below the range, the payment is unreduced. Above the range, no stimulus. Within the phaseout range, there is a pro-rata reduction. Example: for a married filing joint couple with AGI of $156,000, there would be a 60% reduction in whatever stimulus payments would otherwise be payable.
Child Tax Credit
Previously, the child tax credit offered eligible families a $2,000 tax credit per child under the age of 17. With changes made under the new legislation, the child tax credit is temporarily expanding for 2021. Eligible families may receive up to $3,600 for children 5 and under and up to $3,000 for children ages six to 17.
Here is how the American Rescue Plan is changing conditions and stipulations regarding the child tax credit:
- The $2,500 earning floor will be waived.
- The credit will be fully refundable.
- The federal government will send eligible families credit in advance between July and December 2021.
Small Businesses & The PPP
Overall, the bill allocates around $50 billion toward assisting small businesses affected by COVID-19.
The Paycheck Protection Program will receive $7.25 billion, but the new legislation does not change the PPP’s end date of March 31, 2021.1 Bars, restaurants and entertainment venues heavily impacted by the pandemic will also be eligible to receive grants from the government.
Low-income communities have been some of the hardest hit financially during the pandemic. In response, the government will be allocating $15 billion toward Economic Injury Disaster Loan (EIDL) Advanced Grants. Eligible businesses in low-income communities may be able to receive up to $10,000 each.
Employee Retention Credit
The Employee Retention Credit (ERC) will be extended through the end of 2021. With this refundable tax credit, business owners may claim up to $7,000 per employee per quarter.
COVID-19 Vaccination Distribution & Testing
Similar to previous legislation, a portion of the American Rescue Plan will designate funding for COVID relief. Around $15.05 billion will go toward vaccine production and distribution, while $50.8 billion will go towards testing, contact tracing, genome sequencing, and global health response initiatives.
The Federal Emergency Management Agency will receive a portion of the funds as well.
State & Local Government Assistance
States, tribal governments and cities will receive $350 billion in federal assistance.
In addition, this legislation includes a $10 billion infrastructure program to help local government continue capital projects.
FEMA Emergency Food and Shelter Program
FEMA’s Emergency Food and Shelter Program will receive $510 million to support initiatives for homeless and struggling families including:
- Shelter and meals
- One month’s rent
- Mortgage assistance
- One month’s utility payments
If you have specific questions about how this may affect you, please contact us.