The highly-anticipated $1.9 trillion COVID-19 relief package known as the American Rescue Plan Act of 2021 has been signed into law. The new package includes relief provisions for individuals and businesses, including another round of stimulus checks, extended tax credits and additional unemployment benefits. Below we dig into several of the highlights and key takeaways of the American Rescue Plan.
$1,400 Stimulus Checks
The criteria for the third round of individual stimulus payments is similar to the first two rounds, with full $1,400 payments given to those making up to $75,000 for individuals and $150,000 for married filing jointly. Phaseouts equaling $5 for every $100 of Adjusted Gross Income (AGI) beginning at $75,000 up to $80,000 for individuals and $150,000 up to $200,000 for married filers. Individuals will also receive an additional $1,400 for each dependent.
$7.25 Billion Added to PPP
The American Rescue Plan adds $7.25 billion in additional funding to the Paycheck Protection Program (PPP). The plan also extends PPP eligibility for more not-for-profits, including advocacy and lobbying groups and larger organizations. Eligible entities now have until May 31 to apply for a PPP loan.
$25 Billion Restaurant Revitalization Fund
In an effort to help restaurants and bars recover from the financial impacts of COVID-19, $25 billion will be allocated for a Restaurant Revitalization Fund (RRF). Through the RRF, restaurants and bars can apply for a grant equal to their pandemic-related revenue loss, up to $10 million per entity or $5 million per location, limited to 20 locations. Grants will be calculated by subtracting 2020 revenue from 2019 revenue.
Grant funding can be used for eligible expenses including payroll costs, rent and utilities, maintenance, supplies and PPE, supplier costs, operational expenses, paid sick leave, and other expenses as determined by the SBA.
The RRF will also offer support for food and beverage establishments including food stands, trucks and carts, caterers, saloons, inns, taverns, lounges, brewpubs, tasting rooms and taprooms.
ERTC Extended to 12/31/21
The Employee Retention Tax Credit (ERTC) was introduced by the CARES Act and eligibility was expanded for the first two quarters of 2021. The American Rescue Plan extends the ERTC through the end of 2021* to benefit more businesses impacted by COVID-19.
*The signing of the Infrastructure Investment and Jobs Act on November 15, 2021, retroactively ended the ERTC as of September 30, 2021, for all employers other than recovery startup businesses.
Extension of Employee Benefits and Additional $300 Per Week for Unemployment
The $300/week unemployment benefit will be extended through September 6, 2021 under the American Rescue Plan. The first $10,200 in 2020 unemployment benefits will be tax-free for families making $150,000 or less. Those who had taxes withheld from their unemployment benefits in 2020 can recover that money when filing 2020 tax returns or through an amendment.
Unemployed workers are also able to stay on their prior employer’s healthcare plan through the end of September.
Child Tax Credits Expanded
Parents who make $150,000 or less as a couple and single parents making $112,500 or less are eligible for monthly direct deposit payments for ongoing childcare costs. Parents with children ages six to 17 will receive payments of $3,000/year per child, and those with children under age six will receive $3,600/year per child. The American Rescue Plan provides for one year of credits broken out into monthly payments instead of claiming a credit when they file their taxes. The credit is refundable, meaning everyone who qualifies will get it no matter their tax situation.
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