It seems almost a year ago we were writing about the first stimulus bill, and now another bill has been signed into law so we’re once again here to break it down for you. The new stimulus bill, called the “American Rescue Plan Act of 2021," is the largest yet.
First up, we have unemployment payments. The December bill extended the federal expanded unemployment payments at $300/week through mid-March and the new bill extends those $300 payments through September 6, 2021 - just in time. This means that Pandemic Unemployment Assistance increases from 50 to 79 weeks and the Pandemic Emergency Unemployment Compensation is extended for those that have exhausted other weeks of benefits. The bill also excludes up to $10,200 in unemployment benefits from gross income calculations for federal tax purposes so long as the gross income for the individual is less than $150,000.
The bill establishes $1400 stimulus payments which will be paid in addition to the $600 payments granted in December. Individuals earning $75,000 per year and couples earning $150,000 will receive a full $1,400-per-person benefit ($2,800 for couples), however, the benefit disappears for individuals earning more than $80,000 annually and couples earning more than $160,000. Those in between those incomes receive a prorated amount.
Small Business Support
There is a lot of much needed additional small business support in this bill. A new program with $25 billion in grants is created specifically for restaurants and bars hurt by the pandemic. The grants provide up to $10 million per company with a limit of $5 million per physical location. The grants can be used to cover payroll, rent, utilities and other operational expenses. No more than 20 locations per company would be eligible for the aid. The amount a restaurant or bar would receive would be determined by subtracting an applicant restaurant’s 2020 sales from its 2019 revenues, with the aim of compensating the operations for what they lost because of the pandemic. Also, $5 billion of the $25 billion is reserved for restaurants with less than $500,000 in 2019 revenues in order to ensure smaller restaurants are not left out of the funding.
A shuttered venue operations grant program is funded with $1.25 billion. which is tailored towards venues and similar businesses that have not been able to operate during the pandemic and this funding can be used in conjunction with PPP, however, any PPP funds will reduce the amount of shuttered venue operations funding a business can receive.
The bill also provides $7.25 billion for the Paycheck Protection Program, a tiny fraction of what was allocated in previous legislation. However, it allows more nonprofits to be eligible to apply for the loans. Furthermore, $15 billion is put towards the Economic Injury Disaster Loan (EIDL) advance payments which have been running dry.
Finally, funding has been allocated for partner programs, states, and communities to help create resources and awareness of available COVID-19 funding under these provisions, as well as funding for specific programs for businesses owned/controlled by socially and economically disadvantaged individuals.
The American Rescue Plan includes $3.6 billion for USDA purchasing and distribution of agricultural commodities and COVID-19 mitigation efforts for agricultural and supply chain workers. This bill, compared to previous efforts, allows for more distribution channels for food donations, including restaurants.
An important part of the agricultural allocations is the $4 billion allocated to provide direct payments of up to 120% of a socially disadvantaged (meaning African American, Hispanic, Native American, or Asian American) farmers' outstanding debt from loans including USDA FSA direct farm loans, USDA guaranteed loans, Commodity Credit Corporation farm storage loans, and other qualifying loans. The amount is over 100% in order to provide assistance to the farmer in paying off any taxes associated with the amount of the direct payment in relation to the outstanding debt.
In addition to the direct payments for debt forgiveness, $1.01 billion is dedicated to provide outreach, training, education, technical assistance, grants and loans, and funding to educational institutions to help improve land access for socially disadvantaged farmers and ranchers and address heir’s property issues, among other issues.
There is also funding for rural health care, international food insecurity and humanitarian care, and food and nutrition support and enhanced benefits for SNAP recipients.
Child Tax Credit
The new bill greatly expands the child tax credit to include $3,600 for each child under 6 and $3,000 for each child between 6 to 17 years old. Those eligible are expanded to include more families and income levels as well. The tax credit has similar cut offs to the stimulus checks, with single tax payers making $75,000 and couples making $150,000 receiving the full tax credit and it phasing out above those incomes. Families that earn too much to qualify for the expanded tax credits could still claim the base $2,000 credit for their children provided their incomes are below the current thresholds of $200,000 for single taxpayers and $400,000 for married couples.
The bill also changes how the tax credit is paid. For this year, half of the tax credit will be paid as monthly direct payments from July to December with the remaining amount being a true tax refund.
Housing and Rent
Important additional assistance and extensions are provided related residential housing under the new bill. Included is $21.55 million for rental assistance which can be used for rent, rental arrears, utilities and home energy costs, utilities and home energy cost arrears and other expenses related to housing as defined by the Department of Treasury. The assistance cannot exceed 18 months and there are set amounts of the funds each state can use towards case management and administrative costs. There is also funding for emergency housing vouchers, assistance for rural housing, counseling related to housing, and homelessness assistance and supportive services.
$9.96 billion is allocated to the homeowner assistance fund which is allocated to the states to provide mortgage payment assistance or other financial assistance to homeowners. And there are also relief measures included in the bill for single family housing direct loan borrowers.
State and Local Governments
The new package allocates $350 billion to state and local governments to aid with budget shortfalls and funding programs. There is also $10 billion set aside for local governments to support infrastructure projects.
Vaccines and Health
In order to speed up support for vaccination and provide more opportunities for health care the bill includes several key health provisions. These provisions include $14 billion for vaccine distribution, $34 billion to expand subsidies under the Affordable Care Act and make health insurance more affordable, and a 100% subsidy of COBRA health insurance premiums to ensure that the laid-off workers can remain on employer health plans at no cost through the end of September.
There are also additional provisions making any student loan forgiveness that is granted between 2021 and 2025 tax exempt, relief for transit systems, support for tribal governments, funding for schools to aid in reopening, and a greatly expanded earned income tax credit for 2021 that allows those without children to be eligible for the credit. This is a HUGE bill and one of the biggest expansions of social programs in decades to help with the sweeping impact of the pandemic on Americans and our economy.
We hope this has helped make this new law more tangible and explained some of its key provisions designed to help individuals and businesses. If you’re having trouble sleeping at night you can check out the whole bill: here.
DISCLAIMER: This blog post is meant for informational purposes only and does not constitute specific legal advice or create an attorney-client relationship. Readers should discuss their specific situation with an attorney.