US bailout includes stimulus controls, tax code, education, PPP

After months of debate regarding the federal government’s third round of economic stimulus linked to COVID-19, President Biden signed the American Rescue Plan Act (ARP) promulgated on March 11.

As we summarize below, the ARP will provide federal dollars through a wide range of channels, including individual stimulus checks, funds for state and local governments, COVID-19 tests and vaccines, education. , small businesses and anti-poverty programs, including three expanded tax credits.

American Rescue Plan Act: key provisions

$ 1,400 in individual stimulation checks

Of the funds distributed by the ARP, the largest portion, over $ 400 billion, goes directly to individual taxpayers. The ARP grants a direct payment of $ 1,400 for a single taxpayer, or $ 2,800 for a married couple filing jointly, plus $ 1,400 per dependent. People earning up to $ 75,000 would receive the full amount, as would married couples earning up to $ 150,000. The legislation includes a phase-out starting above these thresholds, with a strict threshold of $ 80,000 for individuals and $ 160,000 for married couples.

State aid, Local Authorities

The second largest portion of funds goes to state and local governments. The ARP is allocating $ 360 billion for the tracing and administration of COVID-19 vaccines at the national and local levels. This aid is intended to prevent further government layoffs and service cuts. Echoing one of the president’s main initiatives, recipients of these funds are tasked with “making the necessary investments in water, sewers or broadband infrastructure,” according to Title IX, Subtitle M of the ARP.

For the unemployed and low-income families

With the federal unemployment benefit supplement set to expire on March 14, the signing of the ARP extended the current weekly unemployment assistance by $ 300 until September 6, 2021. Additionally, for tax year 2020, the first $ 10,200 of unemployment income received by a taxpayer will be tax exempt. For this to apply, the adjusted gross income of individuals and married couples cannot exceed $ 150,000. In addition, for married taxpayers, the tax-exempt amount per person cannot be accumulated. This means that if spouse A had unemployment income of $ 15,000 and spouse B had $ 5,000 then spouse A will still be taxed on $ 4,800 of unemployment income. Varnum will update the information if and when the Internal Revenue Service issues additional guidance.

Amendments to the tax code

The ARP makes significant changes to the child tax credit, the working income tax credit, and the tax credit for child care and dependents.

The ARP also increases the dollar limit and the applicable percentage for the credit for child care and dependents. For the 2021 tax year, the dollar limit is increased from $ 3,000 to $ 8,000 for one eligible child / dependent and from $ 6,000 to $ 16,000 for two eligible children / dependents. Working parents will be able to offset up to 50 percent of work-related childcare costs, up from 35 percent previously.

Extension of the Paycheque Protection Program (PPP); EIDL Advance and Restaurant Revitalization Fund

ARP extends eligibility for PPP loans for small businesses to include other nonprofits and internet publishing organizations. The ARP is also allocating an additional $ 15 billion in funds for EIDL advances. Additionally, the ARP is creating the Restaurant Revitalization Fund to provide grants to cover certain expenses of restaurants that have lost income due to the pandemic.

Reopening of schools and higher education

The ARP supports the safe reopening of schools, through investments in modernizing the ventilation system, reducing class sizes and personal protective equipment to help make public schools safer. It also allocates $ 40 billion in grants to higher education and requires institutions that receive the funds to spend at least half of it on emergency student financial aid grants. In addition, the ARP predicts that, until 2025, any student loan canceled by the lender would not be subject to income tax.

Eric M. Nemeth, Mary Kay Shaver, and Yezi (Amy) Yan contributed to this article.


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