On March 11, President Biden signed the American Rescue Plan Act of 2021 (ARP). This is the latest COVID-19 relief plan. The central thrust of the new law is prompt relief for those Americans in the greatest economic distress. This relief is accomplished through a combination of direct $1,400 payments to individuals, enlarged tax credits for children, and an extension of unemployment benefits to September 6, 2021.
While the bill also contains updates to the familiar Paycheck Protection Program (PPP) and the Economic Injury Disaster Loan (EIDL), the PPP additions in particular were modest compared to earlier rounds and have a short fuse attached. Here are details on a few of these and other updates found in the ARP.
Direct Payments to Individuals and Families
Individuals making up to $75,000 and families making up to $150,000 will receive $1,400 per person, in addition to $1,400 each for supported children, including those in college. The benefit for individuals who earn over $80,000 or families who make more than $160,000 will start phasing out at those levels. These payments are being deposited into bank accounts starting the weekend of March 13, 2021. If the IRS lacks bank account information, a check will be mailed.
Federal unemployment benefits and Pandemic Unemployment Assistance (PUA) of $300 per week have been extended through September 6, 2021. In addition, the first $10,200 of federal unemployment taxes received in 2020 for those earning less than $150,000 is tax-free income at the federal level.
Child Tax Credit
In potentially the most transformative element of the new law, most Americans will receive $3,000 a year per child ages 6–17 and $3,600 for children under the age of 6. Half of the 2021 child tax credit will be paid in advance, and the remaining half paid in monthly payments from July to December 2021. This tax credit is fully refundable in the 2021 tax return. The US is among the last of major democratic nations to adopt such a child tax credit. This bill feature is only for 2021, though a number of senators from both parties have made known their interest in seeing a child tax credit become permanent.
Earned Income Tax Credit
For 2021 only, and for those households with no children, the earned income tax credit was increased from $543 to $1,502. The tax credit was expanded to those who are at least 19 years old; the maximum age of 65 was eliminated.
Continued Small Business Support
The relief package added an additional $28.6 billion to the Paycheck Protection Program (PPP) and expanded eligibility to some not-for-profit organizations. Unfortunately, the application deadline was not expanded and remains March 31, 2021. The ARP also injected $15 billion into the Economic Injury Disaster Loan program and created $5,000 grants for small businesses with fewer than 10 workers that have suffered an economic impact of 50 percent during the pandemic.
March 30, 2021, Update: On March 25, 2021, the United States Senate voted 92-7 to extend the Paycheck Protection Program (PPP) through May 31, 2021. It was set to expire on March 31, 2021. The American Rescue Plan signed March 11, extended the PPP and expanded eligibility. The extension of the PPP was signed by the president, and is much welcome.
The ARP revised the Affordable Care Act (ACA) to allow anyone whose health care premiums are more than 8.5 percent of their income to be eligible for premium subsidies. Some premiums through the ACA will decline by fall 2021. Anyone who receives unemployment is eligible for the maximum amount of subsidies. In addition, outside of the ARP, the federal government reopened the window for enrolling for insurance through May 15, 2021. Additional carrots were offered to states that so far have not expanded their Medicaid programs. The combination of some movement in those decisions, coupled with the other ACA inducements, is aimed at making a further noticeable reduction in the number of Americans without health insurance.
March 31, 2021, Update: Outside of the ARP, the federal government extended the reopened window through August 15, 2021. It was originally reopened through May 15, 2021.
Mortgage and Rental Assistance
The Homeowner Assistance Fund received $10 billion, which will be issued to states and local governments to assist with mortgage and utility payments. Likewise, $21.6 billion was allotted and sent to states and local governments to assist with rental and utility payments.
COVID-19 Contact Tracing and Vaccinations
The ARP issued $47.8 billion for contact tracing, transmission prevention, and diagnosis programs. In addition, $50 billion is going to the Federal Emergency Management Agency (FEMA) to assist with vaccination efforts.
Here is a good summary of what is in the American Rescue Plan and how portions of the plan apply.
ABMP continues to stay on top of small business administration programs, unemployment benefits, and disaster relief aid to help you stay financially afloat during the COVID-19 pandemic. Above is the best information we have as of March 15, 2021, to help you make decisions, but please know that this information can quickly change. We will continue to provide updates as we receive them.
The above text addresses federal government support. There may be additional financial assistance coming from your state or city in the form of other small business loans, grants, or assistance with utilities.