American Rescue Plan Act of 2021 – What We Know

The $1.9 trillion American Rescue Plan Act of 2021 was passed and signed into law last week. This latest round of stimulus includes direct payments to Americans, extended jobless benefits, funds for states and local governments, funds for schools to help them reopen, and infuses small business relief measures with more funding.

Here’s what we know about the package.

Direct $1,400 payments

Individuals making under $75,000 and married couples making under $150,000 will receive direct payments of $1,400 per person. The bill also provides $1,400 per dependent.

Those direct payments would gradually decrease above the $75,000 income level and disappear entirely above an income cap of $80,000 for individuals and $160,000 for married couples. The House’s version of the stimulus plan set the cutoffs at $100,000 for individuals and $200,000 for married couples, but those caps were lowered by the Senate.

Continue $300/week unemployment benefits

The new stimulus bill extends unemployment programs through early September, including the $300-per-week federal supplement provided in the last stimulus plan passed in December. The Senate included a provision to avert surprise tax bills for people who lost jobs, waiving federal income taxes for the first $10,200 of unemployment benefits received in 2020 for households earning under $150,000.

Expanded child tax credit

The new stimulus bill will temporarily expand the child tax credit for 2021, which is currently worth up to $2,000 per child under 17. Under the legislation, the tax credit would be as much as $3,600 for children up to age 5 and as much as $3,000 for children 6 to 17.

The bill will make the full value of the credit available to low-income people who are currently ineligible or receive only a portion. For the second half of this year, it will have the federal government send advance payments of the credit to Americans in periodic installments, akin to a guaranteed income for families with children

The measure also expands the child and dependent care tax credit for 2021, and it would expand the earned-income tax credit for workers without children for this year as well. Through 2025, it would exempt student loan forgiveness from income taxes.

Aid for rural hospitals

The Senate included a package of extra aid of $8.5 billion for certain rural suppliers and hospitals. It has not yet been defined who these possible rural suppliers are, but it is assumed that the US Department of Health and Human Services (HHS) will apply the same definition that it used to implement specific funds for rural suppliers last year.

Aid for local governments and schools

States, local governments, territories and tribal governments will be provided with $350 billion under the new stimulus package. Schools will receive $130 billion for their safe reopening plan, including the purchase of personal protective equipment, modernization of ventilation systems and staff for infirmaries. The measure also includes funding for colleges and universities, transit agencies, housing aid, childcare providers and food assistance.

Provisions for agriculture

Agricultural provisions of the American Rescue Plan Act of 2021 appropriate an estimated $10.4 billion for programs designed to strengthen the agricultural and food supply chain, e.g., animal surveillance or COVD-19 mitigation efforts for agricultural workers; additional resources to purchase and distribute agricultural commodities to nonprofits, restaurants or other food-related entities; increase access to health care in rural communities; and provide debt relief and other support programs for socially disadvantaged farmers and ranchers.

More aid for small businesses

The new stimulus package adds $7.25 to the PPP. However, the forgivable loan program aimed at small businesses was not extended past its current end date of March 31. A coalition of businesses led by the U.S. Chamber of Commerce sent a letter to lawmakers this week, urging them to extend the PPP through year end. Some larger nonprofits will also become eligible for this funding.

Another $15 billion will be added to the Economic Injury Disaster Loan (EIDL) Advance Grant program which provides up to $10,000 for small businesses in low-income communities that have been most affected by the pandemic. The program is designed to roll out in a series of exclusive windows, starting with businesses that didn't get the full amount they applied for initially--that is, $1,000 per employee, up to $10,000. Eligible businesses must have no more than 300 employees and have suffered a loss of gross receipts of more than 30 percent during an eight-week period between March 2, 2020 and December 31, 2021, compared with an eight-week period prior to March 2.

The second EIDL window is for those who've endured losses of 50% and have fewer than 10 employees. The third is for those who've had losses of between 30% and 50% and have fewer than 10 employees. The Small Business Administration must provide $5,000 grants to each eligible company, while funds last.

The new stimulus package also extended the Employee Retention Credit until year end. In the new bill, businesses can claim the refundable credit equal to as much as $7,000 per employee per quarter during the last half of the year. So, including the existing provision, which is similarly apportioned, employers this year would qualify for up to $28,000 per employee--and if they applied for 2020, the total amount available is $33,000 per employee.

A new feature of this stimulus package is relief designated specifically for bars, restaurants, and caterers. A total of $28.6 billion is allocated for grants for bars and food services businesses that would be equal to the difference between a business's gross receipts pre-pandemic and gross receipts last year. If the business has fewer than 20 locations, it can get a grant of up to $5 million per location, up to $10 million in total.

Shuttered venue operators will also be able to apply for grants equal to the lesser of 45 percent of the venue's gross revenue in 2019 or $10 million, with $1.25 billion set aside from the new stimulus package. The SBA has yet to enact the existing live-venue grant program, passed under the last relief package, which allocated $15 billion.