On March 11, 2021 President Biden signed the American Rescue Plan Act - a $1.9 trillion stimulus plan meant to extend, renew and implement relief for those affected by the COVID-19 pandemic.
Below is a breakdown of some important components of the stimulus package, including what business owners, families and struggling individuals may need to know.
Eligible unemployed individuals may continue receiving an additional $300 in federal unemployment benefits through early September 2021.1
Small Businesses & The PPP
Small businesses will get some much needed assistance as the American Rescue Plan Act allocates around $50 billion toward assisting small businesses affected by COVID-19.1
The Paycheck Protection Program will receive $7.25 billion, however the PPP's end date of March 31, 2021 remains the same under the new legislation. 1 Some small businesses heavily impacted by the pandemic such as bars, restaurants and entertainment venues 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.1
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.1
Similar to previous relief bills, the American Rescue Plan Act will send direct stimulus payments of $1,400 to eligible American taxpayers. Also, the eligibility requirements for these payments are similar to previous checks as 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 $2,800.1
There will be a phase-out and income cap for individuals and couples who make more. Individuals who are earning between $75,000 and $80,000 will receive a lesser amount, while those making above $80,000 will not be eligible to receive a stimulus payment. The same applies for couples earning between $150,000 and $200,000 - with $200,000 being the cap.1
Child Tax Credit
The American Rescue Plan Act has made a new change to the child tax credit as previously, the child tax credit offered eligible families a $2,000 tax credit per child under the age of 17. However, now the child tax credit is temporarily expanding for 2021. Eligible families may receive up to $3,600 for children ages 5 and under and up to $3,000 for children ages six to 17.1
Below is how the American Rescue Plan is changing conditions and stipulations regarding the child tax credit:1
- 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.
COVID-19 Vaccination Distribution & Testing
Similar to previous legislation, a portion of the American Rescue Plan will be designate for the funding of COVID relief. Around $15.05 billion will go toward the production and distribution of the vaccine, while $50.8 billion will go towards testing, contact tracing, genome sequencing and global health response initiatives.1
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. State and local governments can use these funds in a variety of ways including, to help aid households and small businesses, fund government services that have been affected by less tax revenue, or make necessary investments to the infrastructure of the state.
In addition, this legislation includes a $10 billion infrastructure program to help local government continue capital projects.1
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:1
- Shelter and meals
- One month’s rent
- Mortgage assistance
- One month’s utility payments
Are you wondering how the American Rescue Plan Act and other COVID-relief initiatives may benefit you? Talking with your trusted financial professional can offer additional assistance and insight as we all continue to deal with the economic instability caused by COVID-19.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.