President Biden has signed the American Rescue Plan Act - a $1.9 trillion stimulus plan meant to extend, renew and implement relief for those affected by COVID-19. This was one of Biden’s first major moves as President.
Check out some important components to this legislation below.
Individuals who became unemployed due to the COVID-19 pandemic may continue receiving an additional $300 in federal unemployment benefits through early September 2021.1
Small Businesses & The PPP
If your small business was affected by COVID-19 there is help for you in the newly passed bill. Overall, around $50 billion is allocated toward assisting small businesses affected by COVID-19.1
The Paycheck Protection Program will receive $7.25 billion, but the end date of March 31, 2021 remains in effect.1 Bars, restaurants and entertainment venues heavily impacted by the pandemic will also be eligible to receive grants from the government.
Because low-income communities have taken some of the hardest hits financially, another $15 billion is earmarked for Economic Injury Disaster Loan (EIDL) Advanced Grants. Additionally, eligible businesses in low-income communities may be able to receive up to $10,000 each.1
Employee Retention Credit
Another helpful piece of the bill is the extension of The Employee Retention Credit (ERC). This refundable tax credit will be extended through the end of 2021. Eligible business owners may claim up to $7,000 per employee per quarter.1
As with previous relief bills, eligible American taxpayers will be receiving direct stimulus payments of $1,400 as part of the new bill. Also 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 direct stimulus payments.1
There will be a phase-out and income cap for individuals and couples with higher incomes. Individuals earning between $75,000 and $80,000 will receive a lesser amount. This amount will quickly phase out, with those making above $80,000 receiving no stimulus payment. The same applies for couples earning between $150,000 and $200,000 - with $200,000 being the cap in that income range.1
Child Tax Credit
The previous child tax credit offered eligible families a $2,000 tax credit per child under the age of 17. The American Rescue Plan Act changed that for 2021. 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 6 to 17.1
Here is how the bill is impacting 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 designate funding for important 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.1
A portion of the funds will also be distributed to the Federal Emergency Management Agency.
State & Local Government Assistance
$350 billion in federal assistance will be distributed to states, tribal governments and cities.
In addition, this legislation includes a $10 billion infrastructure program to help local government continue with 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
Too much information all at once? Are you wondering how this recent legislation and other COVID-relief initiatives may benefit you? Your trusted financial professional can offer additional assistance and insight as we all continue to combat the economic instability caused by COVID-19.