California Society of CPAs: Highlights of the American Rescue Plan Act
President Biden signed the American Rescue Plan Act of 2021 (HR 1319), a $1.9 trillion package that aims to provide additional relief from the economic hardships caused by the pandemic and state and local governments in need of financial support.
The specific legislative language is available online, as is a Title-By-Title Summary developed by Senate Democrats.
Details about the various provisions of the legislation will be forthcoming as language and provisions are analyzed.
In the meantime, here are some of the package highlights:
- State and Local Aid: $350 billion to assist states, counties, cities and tribal governments manage fiscal challenges associated with the COVID-19 pandemic.
- Economic Impact Payment: Direct payments of $1,400 for most individuals with an adjusted gross income of less than $75,000. Payments will phase out for individuals above $75,000 and be zero for individuals $80,000 and above. Payment calculations will be based on 2019 or 2020 tax filings.
- Tax Provisions:
- Earned Income Tax Credit: Expansion of the EITC amount and eligibility for certain taxpayers.
- Child Tax Credit: Increases the Child Tax Credit maximum amount, expands eligibility to 17-year-olds, and makes the credit fully refundable.
- Dependent Care: Temporary increase to the child and dependent care tax credit, including making it refundable.
- Employee Retention Credit: Extends the employee retention credit established by the CARES Act through Dec. 31, 2021.
- Paid Leave Credits: Extends tax credits for employer-provided paid sick and family leave established under the Families First Coronavirus Response Act through Sept. 30, 2021.
- Expanded Unemployment: Extends the many unemployment assistance provisions through Sep. 6, 2021. and makes the first $10,200 in unemployment benefits tax-free.
- Small-Business Provisions: $7.25 billion for the Paycheck Protection Program (PPP) forgivable loans and expands eligibility for larger nonprofits. This does not extend the March 31, 2021 deadline for loans.
- Education: Funding to support school and student relief programs.
- Health and Human Services: Significant funding for vaccine development and distribution, child care programs, Medicade and Medicare programs, COBRA continuation coverage, expanded Supplemental Nutrition Assistance Program funding, and funding for emergency housing and rental relief.
- Additional Items: Funding for Homeland Security disaster planning, agricultural relief programs, assistance and funding for transportation and other infrastructure.
As a reminder, CalCPA has a resource page specific to COVID-19 related updates from various state and federal government agencies.
Please note, that these legislative and regulatory changes are complex and wide ranging. Before making any determinations for yourself or your client, be sure to review the provisions in detail and consult with experts as appropriate.