On Thursday, March 11, President Biden signed a new stimulus relief package, known as the American Rescue Plan, into law. The $1.9 trillion stimulus package is geared to boost the economy and help provide wider access to COVID-19 vaccinations in an effort to curb the effects of the ongoing pandemic.
This is the third stimulus package passed by Congress since the pandemic began. While the ink is still fresh, let’s take a look at some highlights of what’s included!
Individual stimulus checks
This bill includes a third round of stimulus checks that will be sent directly to individuals. Checks will be $1,400 for a single person making less than $75,000 annually and $2,800 for couples filing jointly with a combined household income less than $150,000 annually. Additionally, the parents or guardians of children and adult dependents are eligible for this round of $1,400 checks, unlike the two previous rounds of stimulus payments.
Child tax credit
The child tax credit is being expanded under the American Rescue Plan, with the payment amount being raised to $3,000 for children ages 6 to 17 and $3,600 for children under the age of 6. This credit will be paid to eligible families in monthly payments, up to $300, from July through the end of 2021. The payment amounts are gradually reduced for individuals earning more than$75,000 and couples earning more than $150,000 per year.
Federal, state, local, and tribal public health agencies will receive $8.5 billion to enhance their efforts to distribute, administer, and track vaccinations, with additional funds set aside to help vaccine availability in underserved communities.
Paycheck Protection Program
The widely utilized Paycheck Protection Program (PPP) loan will be reinvigorated with $7.25 billion to help small businesses cover payroll costs and some operational expenses. Additionally, the new stimulus package allows more nonprofits to apply for federal PPP loan dollars; even advocacy groups and those that are involved with limited lobbying will have access to the loan.
The new stimulus package extends the existing unemployment benefit from the previous economic relief bill of $300 per week, which was set to expire on March 14, through September 6, 2021. This bill also designates the first $10,200 in unemployment payments as nontaxable income for households with an income of $150,000 or below.
Employee retention tax credit
The employee retention tax credit (ERTC) was designed to assist businesses severely impacted by the pandemic with financial relief. The American Rescue Plan now extends this credit through to December 31, 2021, and will structure the ERTC as a refundable payroll credit against an employer’s share of the Hospital Insurance tax starting after June 30, 2021. Notable enhancements to this credit allow hard-hit businesses to count wages paid to all employees as qualifying wages toward their credit. This credit will be available to start-up businesses. Businesses started in 2020 need to use their average number of employees to determine eligibility.
Paid sick and family leave
The Families First Act initially created a refundable tax credit for employers providing COVID-related paid sick and family leave. While providing this paid leave is no longer mandated, the tax credit has been extended to September 30, 2021, under the American Rescue Plan.
The new stimulus package also increases the amount of wages an employer can claim in a year from $10,000 to $12,000 per employee. Additionally, the legislation expands the list of reasons an employer can claim this credit and allows employers to claim it for employee leave taken for reasons related to the COVID-19 vaccine. Tax-exempt entities and state and local government employers are now allowed to claim this credit and employers are now prohibited from claiming the credit if their leave policy discriminates in favor of their highly-compensated or full-time employees or is based on length of service.
As always, Nextep’s experts will keep an eye on any new developments and keep you up-to-date as we are made aware of them. In the meantime, if you have any questions, contact your HR business partner or call us at 888.811.5150. Find more COVID-19 info on our helpful resources page.