Biden Signs $1.9 Trillion Stimulus Package: Here's What You Need to Know
On Thursday, March 11, President Joe Biden signed the $1.9 trillion dollar COVID relief package into law, marking the president’s first official legislative action since Inauguration Day.
The Covid-19 relief bill aimed at helping the American people during the Coronavirus Pandemic came after Democrats passed the bill through Congress using the budget reconciliation process, which eliminated the need for bipartisan support. The House approved this legislation on Wednesday, despite Republican protests.
Let’s dig into the highlights of the American Rescue Act and how it might impact your life as early as this weekend.
$1,400 stimulus checks are on their way
Majority of Americans can expect a third round of stimulus checks to begin hitting their bank accounts as soon as this weekend. White House Press Secretary Jen Psaki announced that the IRS would begin issuing direct payments over the next few days. This would be the first wave of stimulus checks being sent, with more to follow over the next several weeks.
The bill has amended eligibility for stimulus relief since the legislation’s inception. Currently, single filers will be eligible for a $1,400 check if they made under $75,000 in 2019 or 2020 (depending on their last filed tax return). Stimulus benefits phase out gradually and cap off for those earning $80,000 AGI or higher.
If you’re a married couple filing jointly, you’ll receive $2,800 if you earn $150,000 or less, capping off at $160,000 AGI.
In addition, you’ll receive a $1,400 bonus for each dependent (including college students over 17 and adult dependents).
Those with direct deposit will begin seeing stimulus money hit as early as this weekend, while those without direct deposit set up through the IRS will begin receiving checks in the next few weeks.
The 2021 Child Tax Credit has been expanded
In addition to stimulus payments, this new bill has increased the amount families will receive for the child tax credit. For the 2021 tax year, families will receive a $3,000 annual benefit per child aged 6 to 17. Families will receive $3,600 per year for children under six.
This is available to single filer parents earning up to $75,000 per year. The credit then phases out by $50 for every additional $1,000 earned. It completely phases out at $95,000. Couples filing jointly making less than $150,000 will receive the full credit, which will phase out at $170,000.
Families ineligible for this credit due to higher AGIs still may be eligible for the former $2,000 per child credit. This will phase out at $200,000 for single filers and $400,000 for married couples.
This credit will be available regardless of a parent’s employed status, is fully refundable, and will start being insured in advance in smaller payments as early as this summer.
The increase is only good for the current tax year, but could be expanded in the future.
Unemployment benefits have increased; tax exemptions included
If you’re on unemployment currently, you’ll see a temporary $300 weekly bonus that lasts until September 6th. This increase in jobless benefits is designed to help Americans still struggling financially, while also boosting local economies.
In addition, if you were on unemployment in 2020, a provision was included in this signed bill that exempts you from paying unemployment taxes on the first $10,200 earned in unemployment income. This will alleviate large tax bills for millions of Americans who turned to unemployment during the pandemic.
Increasing access to COVID-19 vaccinations
This bill will also put approximately $20 billion into funding COVID-19 vaccine distribution, in order to produce larger supplies to speed up vaccination plans. President Biden has called for states to roll out vaccines to all adults by May 1st of this year. His hope is that by July 4th, Americans can safely attend small gatherings.
$50 billion in rental assistance, mortgage help, and housing initiatives
This bill also includes money to help renters and homeowners better afford rent and mortgage payments during the current economic crisis. The package includes $22 billion in rental assistance and $10 billion in homeowner’s assistance to help struggling families.
In addition, the bill also provides $5 billion in aid to the homeless, specifically designed to provide more sufficient housing options.
Push for schools to reopen
Many schools have been struggling to reopen safely during the pandemic, with students and teachers bearing the brunt of navigating distance learning. This bill includes more than $125 billion to help K-12 schools reopen, while also address learning losses that occurred as a result of shutting down schools during the pandemic.
Student loan taxation eliminated
Student loan forgiveness has been a hot issue during the pandemic and subsequent election. While the current bill does not offer any form of student loan forgiveness, it did eliminate taxation on forgiven debt through 2025.
Right now, if your student loans are forgiven, you’re responsible for paying taxes on the forgiven amount. For instance, a $40,000 forgiven debt at a tax rate of 15% (percentage varies by income level), could stick you with a $6,000 tax bill due during tax season.
This interesting addition paves the way for Congress to pass student loan forgiveness legislation before 2025, without requiring Americans to foot hefty tax bills.
Healthcare access and subsidies expanded
Biden’s American Rescue Act also includes significant changes to the Affordable Care Act, initially signed in 2010 by President Obama. This new bills lowers insurance premiums through the public marketplace to 8.5% of an individual’s income and allows those making as much as $51,520 to receive federal healthcare aid. These new subsidies currently last for the next two years, unless Congress decides to extend them.
Individuals currently receiving COBRA or who have left their jobs during the pandemic can receive COBRA benefits subsidized 100% through the federal government.
For states that have not expanded Medicaid through the ACA already, the federal government is prepared to cover a large share of these expenses.
SNAP benefits boosted, additional food assistance offered, aid for some farmers
Food deserts and hunger have been major issues throughout the pandemic. To help, this bill will provide $1.15 billion towards food for those in need, by increasing SNAP (Supplemental Nutrition Assistance Program) benefits by 15% through the end of September 2021 (extending this increase from its June end date).
SNAP also will receive $25 billion for technological improvements, to update their current online system and make it easier for Americans to access their benefits.
Other food assistance offered in this bill includes:
- $5 billion in Pandemic-EBT expansion (grocery vouchers for low-income families of children who lost school breakfasts and lunches)
- $880 million for Special Supplemental Nutrition Program for Women, Infants, and Children (WIC)
- $1 billion in food assistance to Puerto Rico, American Samoa, and the Northern Mariana Islands
- $37 million to the Commodity Supplemental Assistance Program (for low-income seniors)
Loan assistance is also being extended to farmers and ranchers that have experienced ethnic or racial discrimination.
Aid for restaurants and bars
The Paycheck Protection Program (PPP) helped many small businesses throughout the pandemic, but restaurants and bars experienced a disproportionate amount of financial hardship.
This bill provides $28.6 billion in grants for restaurants and bars to help make up for lost revenue and give them a fighting chance at survival.
State and community funding
In order to recover from lost revenue, $220 billion is being provided to states, territories, and tribal governments (and an additional $130 billion for cities and select communities). This funding can be used for infrastructure projects, but cannot be used to cut taxes or be used to fund pensions..
The bottom line
The new American Rescue Plan is designed to provide aid to those hardest hit during the pandemic. This new bill provides specific benefits for taxpayers, schools, states, communities, and restaurant owners.