|On March 11, President Biden signed into law the American Rescue Plan Act of 2021 (ARPA). The $1.9 trillion bill is extensive and we have outlined important details for our members to be aware of. The full legislative text can be reviewed here: H.R.1319 – American Rescue Plan Act of 2021. The Chamber has provided highlights of significant sections of the bill below:
Business and Nonprofit Provisions of the ARPA COVID-19 Relief Bill
- Extension of the Employee Retention Tax Credit (ERC)
- Extended through December 31, 2021.
- Extension of the Families First Coronavirus Response Act (FFCRA)
- Extends the rules for sick leave pay and family medical leave pay through September 30, 2021.
- The family medical leave pay cap is increased from $10,000 to $12,000.
- Restaurant Revitalization Fund
- An additional $28.6 billion has been set aside for restaurants and bars.
- Relief received will be based on pandemic-related revenue loss and must be used for specified costs.
- Any amount received will not be included in gross income.
Individual Provisions of the ARPA COVID-19 Relief Bill
- Stimulus Payments
- The third round of stimulus checks has been approved for individuals, consisting of a $1,400 check for eligible individuals and each eligible dependent claimed. All individuals must have a social security number.
- Stimulus checks are based on the taxpayer’s 2019 income tax return or their 2020 return if it has been processed by the IRS.
- The benefit phases out for individuals when adjusted gross income (AGI) is between $75,000 and $80,000 ($150,000 – $160,000 for joint returns) with no payment if AGI is above those limits.
- Unemployment Benefits
- Taxability: The first $10,200 of unemployment payments for each individual for 2020 will not be taxable for households with AGI of less than $150,000. This threshold applies to both single and married taxpayers.
- Benefits: An extension of an additional $300 per week through September 6, 2021.
- Taxpayers who already filed a return and included unemployment benefits in gross income should wait for additional IRS guidance.
- Child and Dependent Care Credit
- The amount of allowable expenses increases to $8,000 for one child and to $16,00 for two or more children, subject to the 50% credit limit giving a credit of $4,000 and $8,000.
- The maximum credit rate increase of 50% now starts to phase out at the higher AGI level of $125,000.
- For 2021, the credit will be refundable.
- The exclusion for employer-provided dependent care assistance is increased from $5,000 to $10,500 ($5,250 for married filing separate) for 2021.
- Child Tax Credit and Advance Payments
- For 2021, the credit increases to $3,000 per child ($3,600 for a child under the age of 6) and increases the eligibility age for a qualifying child to 17.
- The additional $1,000 or $1,600 credit over the standard $2,000 credit begins to phase out when modified AGI exceeds $150,000.
- These provisions do not modify the existing child tax credit of $2,000 per child and those related rules.
- Treasury will begin making advance payments of the child credit based on 2019 or 2020 tax return information in periodic installments beginning July 1, 2021, equal to 50% of what the taxpayer would be entitled to for 2021.
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