The American Rescue Plan – Key Points

The $1.9 trillion bill is the first major federal response to the COVID-19 pandemic in 2021, following closely behind the passage of the $900b COVID-19 relief bill in late December. Since the start of the pandemic a year ago, Congress has approved more than $5 trillion in stimulus and relief through a handful of bills.

The ARPA strengthens and extends certain federal programs enacted through the Coronavirus Aid, Relief, and Economic Security (CARES) Act of 2020 and other COVID-19 relief measures, and it establishes a few new federal programs. Below is a summary of select provisions in the bill:

Item American Rescue Plan Act as enacted
Unemployment insurance
  • Extends pandemic unemployment programs through 6 September
    • $300/week add-on
    • First $10,200 of unemployment compensation not taxable for households with incomes below $150,000
Federal minimum wage Increase to federal minimum wage not included after ruling by Senate parliamentarian that it did not meet the requirements of budget reconciliation
Direct payments to individuals $1,400 per individual and dependent, $2,800 for joint filers

Cut off at income levels of $80,000 or higher for individuals and $160,000 or higher for joint filers
State and local funding Provides $360b to help state, local, tribal and territorial governments combat the effects of COVID-19:

  • $195.3 billion for state governments and Washington, DC
  • $130.2 billion for local governments
  • $20 billion for federally recognized tribal governments
  • $4.5 billion for territorial governments
  • Adds authority to use for water, sewer and/or broadband infrastructure; prohibits use for tax cut or deposits into any pension funds
Housing Provides the following for the remainder of FY 2021:

  • $21.6 billion for rental assistance payments through the Treasury Department
  • $9.96 billion to establish the Homeowner Assistance Fund at the Treasury Department
  • $5 billion for emergency Section 8 Housing Choice Vouchers
Health care
  • Subsidizes 100% of premiums for FY 2021 for individuals eligible for COBRA continuation coverage if they lose their job
  • Expands the Affordable Care Act’s premium tax credits for health insurance purchased through an exchange for tax years 2021 and 2022
  • Provides funding for Department of Health and Human Services programs, including:
    • $47.8 billion for testing and tracing activities
    • $8.5 billion for vaccine activities at the Centers for Disease Control and Prevention
    • $7.66 billion to expand the public health workforce and COVID-19 response efforts
    • $7.6 billion for community health centers
Restaurant grants
  • Provides $28.6 billion in grants for the Restaurant Revitalization Fund to be administered by the Small Business Administration
    • Eligible recipients include restaurants, bars, food trucks and caterers, including businesses in airport terminals and tribally owned entities
    • Eligible recipients limited to 20 locations
Education
  • Provides $122.8 billion for grants to states to support local educational agencies in addressing learning loss
  • Excludes from taxable income any student loans discharged between 31 December 2020 and 1 January 2026
  • Creates the Emergency Connectivity Fund in the US Treasury and appropriates $7.17 billion into it to cover the purchase of broadband service and devices by schools and libraries for use by students, staff and patrons at other locations
Paycheck Protection Program
  • Increases funding by $7.25 billion and expands eligibility for the Paycheck Protection Program, and allows forgiveness for additional expenses

 
Defense Production Act
  • Provides $10 billion to use the Defense Production Act to purchase, produce and distribute medical supplies and equipment related to COVID-19
Child care
  • Provides $24 billion for grants for child care providers to use for payroll, rent, personal protective equipment, mental health support and other needs, including $15 billion for the Child Care and Development Block Grant and $1 billion for Head Start
Child Tax Credit (CTC) for tax year 2021
  • Makes the CTC fully refundable
  • Increases the maximum credit to $3,600 for children under 6 years old and $3,000 for other children up to 18 years old
  • Phases out beginning at $75,000 for individuals and $150,000 for joint filers
Dependent Care Tax Credit for tax year 2021
  • Makes the credit refundable
  • Increases the maximum allowable expenses to $8,000 for one dependent and $16,000 for two or more
  • Allows the credit to cover 50% of expenses

 

Source: https://www.ey.com/en_us/public-policy/key-takeaways-from-the-american-rescue-plan-act

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