Update to Below: in March of 2021, President Biden’s American Rescue Plan Act of 2021 (summarized), which provides the largest direct assistance for COVID relief to date, was also passed into law, offering significant new direct assistance payments, a large Child Tax Credit expansion, unemployment benefit enhancements, and more.
A 2nd COVID-19 relief package was passed by Congress and signed by the exiting President this past weekend. It’s not nearly as generous as the 1st COVID package (The CARES Act), but it will offer a bit of respite for a few struggling segments of the U.S. population and businesses.
There are new efforts underway by House Democrats to pass $2,000 stimulus checks, but the Republican-majority Senate has previously refused to vote on that. This doesn’t seem likely to change, but we’ll see what happens.
Below are a few of the highlights from the bill.
$600 Checks (Per Person)
The checks this time are a maximum of $600 per person (including children) – down from the previous $1,200 in the last round. The per child benefit was $500 in the first round, so there is a bit of an increase there.
- If you filed as “individual” or “married filing separately” and your adjusted gross income (AGI) on your last tax return was under $75,000, you’ll get $600 per adult.
- If you filed as “married filing jointly” and your AGI is under $150,000, you’ll get $1,200.
- If you filed as “head of household” and your AGI is under $112,500, you’ll get $600.
- For each dependent age 16 or younger, in your household, you’ll get $600. E.g. a family of 4 with qualifying income levels and 2 children under age 17 would get $2,400
- Adult dependents or students in college do not qualify for additional funds and you can’t get a payment if someone claims you as a dependent, even if you’re an adult.
- There are phaseouts: if individual or married filing separately, and your AGI was between $75,000 and $99,000, you’ll get get a smaller payment. This is also true of married joint filers with an AGI between $150,000 and $198,000 and heads of households with an AGI between $112,500 and $146,500.
- If you had an AGI of more than $99,000 (individual), $198,000 (married filing jointly), or $146,500 (head of household), you won’t get a check.
- The amounts will be based on 2019 income levels.
$300 Unemployment Insurance Enhancement
Similar to the CARES Act, this bill adds up to $300 per week to the normal state unemployment insurance (UI) amounts, up to 11 weeks.
- For example, if your state’s normal UI weekly payment is $300, the weekly payment the UI benefit maxes out at $600/week for those with high enough income.
- The bill adds $300/week of unemployment to those workers whose regular benefits have expired.
- The benefit will be in place for 11 weeks from December 28 through March 14.
- Similar to round 1, 1099 “gig workers” are also able to get the 11-week benefit.
New PPP Funding
The previously depleted Paycheck Protection Program (PPP) receives another $284 billion in funding to help small businesses.
- Loans will be limited to small businesses with 300 or fewer employees that have had drops of at least 25% of revenue during the first, second, or third quarters of 2020 (compared to the same quarter in 2019). Businesses can get a 2nd loan, if they previously got one post the CARES Act, if eligible.
- Maximum amount a borrower can receive is reduced from $10 million to $2 million.
- $12 billion for minority-owned businesses is earmarked.
- Eligibility is expanded to more nonprofits, local newspapers, and TV and radio broadcasters.
- Added a simplified forgiveness application for loans less than $150,000.
Additional Details and Benefits
Included, but not limited to:
- Extends the moratorium on evictions through January 31, 2021. This had been slated to end December 31, 2020.
- $15 billion in grants for live venues, theaters, and museums that have lost 25%+ of revenue.
- $25 billion in emergency rental assistance.
- $13 billion in increased SNAP benefits, raising benefits by 15% for six months. It does not expand eligibility, however.
- $10 billion to child care assistance.
- $82 billion in aid for K-12 schools and colleges.
- $45 billion for transportation aid: $15 billion for airlines, $14 billion for transit, $10 billion for highways, $2 billion for airports, $1 billion for airline contractors, $1 billion for Amtrak.
- “3-martini lunch” deduction: business meal expenses in 2021/2022 are now deductible.
- Extends deadline for states and cities have to use original CARES Act funding through the end of 2021 (versus end of 2020). No additional funding was approved, however.
$20 billion for the purchase of vaccines for availability at no charge for those who need it.
$8 billion for vaccine distribution.
$20 billion to assist with testing.
$3 billion added to the $175 billion fund for hospitals and health care providers for reimbursement of health care-related expenses or lost revenue resulting from the pandemic.
- $7 billion in aid to increase expand broadband access for students, families and unemployed workers, including $300 million for rural broadband and $250 million for tele-health. There is also funding for a $50/month broadband subsidy through the FCC (which transitioned to the Affordable Connectivity Program’s $30 monthly internet credit).
- A tax credit for employers who offer paid sick leave
- $10 billion for the USPS.
- The universal tax deduction for donations is continued and the maximum charitable donation deduction amount for 2021 is increased to $600 for “married filing jointly” and $300 for “married filing separately” filers. The universal tax donation deduction expired at the end of 2021.
While part of the prior CARES Act legislation (versus this round), note that OTC medications and feminine hygiene menstrual care products are qualified medical expenses, retroactive to January 1, 2020 (and without an expiration date). This means that you can now use HSA, FSA, or HRA funds to use income-tax free contributions to pay for these items. Additionally, Congress and the IRS approved new FSA rule changes for 2021 and 2022 that allow up to the maximum FSA contribution to be carried over into the subsequent year (2020 contributions to 2021 and 2021 to 2022). This rule is voluntarily implemented by employers (not mandatory).