Learn more below about how the American Rescue Plan Act can help you, your family, and your neighbors.
Table of Contents
The American Rescue Act authorizes a third round of immediate, direct payments to lower-and middle-income Americans of $1,400, with a phase out at an annual income of $75,000-$80,000 for those filing single, $112,500-$120,000 for head of household, and $150,000-$160,000 for joint filers. The payment is based on a taxpayers' adjusted gross income (AGI).
Eligible parents may receive up to $1,400 for each of their dependents, including adult dependents and college students. Under the CARES Act, parents with eligible dependents were eligible to receive only $600 per dependent.
The IRS will determine the amount you are owed based on the most recent adjusted gross income that it has in its system. Accordingly, if you haven’t submitted your taxes for 2020, the agency will rely on your 2019 income to ensure payments get out quickly to those who need them. However, the payment is technically based on the income you earn in 2021, meaning that if you earn less this year, you can claim any additional amount when you file next year.
Notably, the IRS plans to issue a follow-up payment later this year when taxpayers have filed their 2020 returns to ensure that eligible individuals and families do not have to wait until 2021 to get what they are owed under the American Rescue Plan Act. To use an example, let's say that a single filer made $81,000 AGI in 2019, but only $60,000 in 2020. The taxpayer is still preparing his/her taxes and hasn't filed yet. Because the taxpayer is over the income limit, he/she will not receive a payment right now, but will get one later this year after they have filed their 2020 returns.
Taxpayers who received past stimulus payments, which were based on their 2018 or 2019 federal tax return information, should click here to learn more about the Recovery Rebate Credit to find out if they are eligible for additional relief. Taxpayers who either lost income, welcomed a child, or were college students and claimed as a dependent in 2018 or 2019 but are no longer a dependent in 2020 can claim a credit on their 2020 federal income tax return for the difference between (a) the amount they are entitled to under law and (b) the amount they received as an advanced payment.
Relatedly, taxpayers who did not receive a previous Economic Impact Payment must file a 2020 tax return to claim a Recovery Rebate Credit. The credit is listed on Form 1040 or 1040-SR for the 2020 tax year.
Expanded Child Tax Credit
Parents and caregivers can claim a Child Tax Credit (CTC) to help reduce their tax bill or provide an extra cash benefit, depending on the number and ages of their dependents. The American Rescue Plan Act drastically scales up CTC: it temporarily increases the amount from $2,000 to $3,600 per child under 6 and $3,000 for children older than 6. It also alters the distribution of the CTC, by allowing families to receive the money as up-front regular payments instead of one lump sum when they file their taxes. Finally, the bill makes the credit fully refundable, meaning that even if a family doesn’t have a large federal tax liability, they will be able to enjoy the full benefit of the credit.
The credit will be advanced based on 2019 or 2020 returns, but, like the Economic Impact Payment, any portion of the credit that a taxpayer is eligible for and does not get in their regular payment can be claimed when they file their 2021 taxes. For one year, the bill expands eligibility for the credit to age 17, rather than age 16. Notably, the expanded credit phases out for filers earning more than $75,000 for individuals, $112,500 for head of household, and $150,000 for joint filers, while the base credit now phases out at $200,000 for individuals and $400,000 for joint filers.
Child and Dependent Care Tax Credit
Eligible working Americans can use the Child and Dependent Care Tax Credit to help offset the costs associated with caring for a child or dependent with disabilities. The size of the credit is determined by an individual’s or family’s child care expenses and income. For 2021, the American Rescue Plan Act increases the amount of child care expenses that are eligible for the credit to $8,000 for one qualifying individual and $16,000 for two or more qualifying individuals. It also makes it fully refundable for one year.
Earned Income Tax Credit
The Earned Income Tax Credit (EITC) is a refundable tax credit for low to moderate income taxpayers. Eligible individuals or joint filers can claim the credit if they either fall below a certain maximum adjusted gross income or can qualify at a higher level with “qualifying children.”
Ordinarily, to claim EITC without qualifying children, an individual must fall below the maximum adjusted gross income threshold and be between 25 and 65 years of age. The American Rescue Plan Act makes individuals as young as 19 – so long as they are not students – eligible for the credit for 2021 and eliminates the upper age limit. Meanwhile, it increases the income levels at which the credit begins to phase out.
The bill extends enhanced unemployment insurance until September 6, 2021, including the $300 federal unemployment insurance bump up that is added to all unemployment benefits. It also includes extensions of the Pandemic Unemployment Assistance (PUA) program, which the CARES Act created to support individuals who do not qualify for regular unemployment compensation – like self-employed workers, independent contractors, and gig workers – as well as the Pandemic Emergency Unemployment Compensation (PEUC) program, which allows states to provide additional weeks of unemployment benefits to individuals who previously received unemployment benefits but exhausted those benefits.
In December, Congress also provided a $100 per-week supplement for “mixed-income workers,” who are self-employed but earned income through traditional W-2 employment. ARPA extends that assistance through September 6, 2021.
Notably, the bill exempts up to $10,200 in unemployment compensation income for 2020 for households with incomes under $150,000. By law, unemployment payments are taxable.
COBRA requires most group health plans to provide beneficiaries with a temporary continuation of group health coverage – continuation coverage – if the group plan would otherwise be terminated when an employee loses their job. However, COBRA coverage does not include continued employer premium contributions, meaning that workers must pay the entire premium themselves after losing their jobs. While COBRA provides ease of mind to individuals and families after a job loss, paying for it can be costly.
The American Rescue Plan Act provides funding so that employers can pay 100% of premium contributions for workers who because of the pandemic were laid off, had their hours reduced, or were furloughed. This will allow individuals and their relatives who are also covered by employer-health plans to continue using the coverage they are currently receiving. The COBRA subsidies are available through September 31, 2021.
The American Rescue Plan Act substantially expands assistance to Americans who purchase health insurance in ACA-markets by temporarily providing health insurance subsidies to individuals who don’t typically qualify because of income restrictions and by increasing the amount for some individuals who already qualify. Among other things, the bill adjusts ACA subsidies so that no one would have to pay more than 8.5 percent of their household income for a benchmark plan.
The bill extends both the 15% increase in SNAP benefits, which helps feed low-income Americans, through September 30, 2021, and the Pandemic EBT program, which provides financial assistance to families whose children would normally be enrolled in school meal programs. $1.4 billion in the bill will support programs authorized under the Older American Act, including $750 million specifically for nutrition programs for older Americans.
Connecticut will provide federal rental and utility assistance, including relief approved in the American Rescue Plan Act, to qualified Connecticut households through a new state program, UniteCT. Learn more about the program and apply for assistance here.
Emergency Rental Assistance
The American Rescue Plan Act includes $21.55 billion in Emergency Rental Assistance for state and local governments to provide financial assistance to eligible renters, which they can use to cover missed rent payments and unpaid utility and energy bills.
The American Rescue Plan Act authorizes $9.961 billion for the creation of a Homeowner Assistance Fund, which will provide grants to states and other housing entities to support homeowners. These funds can be put towards mortgage payment assistance, principal reduction, broadband costs, homeowner’s insurance, flood insurance, mortgage insurance, HOA funds and condo association fees, property taxes, property insurance, utilities, and other housing-related costs.
ARPA provides $100 million for housing counseling to help homeowners and renters behind on monthly payments or who need help navigating their housing options.
Assistance for People Experiencing Homelessness
The American Rescue Plan Act includes $5 billion for the Department of Housing and Urban Development to issue or renew emergency housing choice vouchers for individuals or families experiencing or at risk of homelessness.
LIHEAP and Water Utility Bill Assistance
The Low-Income Home Energy Assistance Program (LIHEAP) provides critical home heating and cooling help to millions of vulnerable American families. According to the National Energy and Utility Affordability Coalition, over 421,000 Connecticut households are eligible for LIHEAP, but only 17.87% of the total eligible population in Connecticut received funding under the program in 2020. ARPA includes $4.5 billion for LIHEAP, and $500 million for low-income water assistance to help low income families meet their utility expenses.
Vaccines and Therapeutics
The Centers for Disease Control and Prevention will receive $7.5 billion to expand vaccine distribution, administration, and tracking along with $1 billion in additional funding to bolster vaccine confidence, education, and improve vaccination rates. FEMA will also receive $7.5 billion to set up vaccination sites across the country.
The Department of Health and Human Services will get $5.2 billion to support research, development, manufacturing, production and purchasing of vaccines, therapeutics, and medical products to treat and prevent COVID-19 and its variants.
The bill authorizes $47.8 billion for the Department of Health & Human Services to expand testing and tracking nationwide and $1.75 billion for the CDC to conduct, expand, and improve activities to sequence genomes, identify mutations, and survey the circulation and transmission of viruses including SARS-CoV-2.
ARPA approves over $7.6 billion for the Department of Health & Human Services to expand our public health workforce and enhance its ability to respond to the current pandemic. Kaiser Health News reports that at least 38,000 state and local public health jobs have been lost since 2008.
Community Health Centers, which serve 30 million patients nationwide, will receive $7.6 billion to carry out COVID-19 vaccine-related activities; conduct COVID-19 testing, contact tracing, surveillance, mitigation, and treatment; purchase COVID-19 equipment and supplies; support health care workforce; expand health care services and infrastructure; and conduct COVID-19 community outreach and education activities.
Defense Production Act
The Defense Production Act allows the federal government to order manufacturers in the private sector to produce critical supplies. The American Rescue Plan Act provides $10 billion to expand domestic production of personal protective equipment (PPE), vaccines, and other medical supplies.
ARPA provides nearly $129 billion in emergency relief funding to prepare public K-12 schools for safe in-person instruction and to help students catch up academically. This money can go to shrinking class sizes, ensuring classrooms are socially distant, updating HVAC systems, hiring additional teachers, nurses, and counselors and much more. Additional funding will go towards increasing rural broadband to ensure all students can complete their homework with reliable internet access.
Colleges and Universities
ARPA provides $39.6 billion to colleges and universities, at least half of which these institutions must use on emergency financial aid grants for students struggling with costs. The other half of that funding will help cover costs associated with facility cleaning, testing, vaccination efforts, mental health resources, PPE expenses, and pay for other lost revenue and increased costs.
Child Care and Head Start
The bill provides $15 billion for the Child Care and Development Block Grant (CCDBG) program, which helps states, tribes, and territories provide aid to low-income working families to access and afford child care. $24 billion will also go to Child Care Stabilization grants, which states must award to support struggling child care providers. Providers can use the funding to pay operating expenses, cleaning supplies and personal protective equipment, and mental health support. Additionally, the bill increases funding for Head Start, which provides support for early childhood education and nutrition for low-income families.
The relief package supports more businesses and non-profits by expanding Paycheck Protection Program (PPP) eligibility, increasing program funding for the PPP, and replenishing funding for the Economic Injury Disaster Loan program. Industries most affected by the pandemic, such as restaurants, bars, and independent venues, will receive additional relief too.
Paycheck Protection Program
This bill adds $7.25 billion in funding for PPP and expands eligibility for certain nonprofits. Click here for more information about the PPP.
The bill creates a $28.6 billion Restaurant Revitalization Fund, modeled after the RESTAURANTS Act - a bill I co-sponsored. This support will be provided in the form of grants in the amount of the difference between a restaurant’s 2019 and 2020 revenue, with a maximum grant of $5 million per location and $10 million per business entity.
Support for Live Venues
The package authorizes $1.25 billion in additional funding for a fund to assist shuttered entertainment venues. The fund, which Congress created in December, will provide grants to eligible live venue operators, theatrical producers, live performing arts organization operators, museum operators, motion picture theatre operators, or talent representatives that have experienced significant revenue losses.
Because the SBA has been slow in setting up the program, the bill allows eligible applicants to access both the Shuttered Venue Operators Grant and PPP.
Economic Injury Disaster Loan (EIDL) Advance Grants
The relief package approves $15 billion in new funding for EIDL grants to be targeted at the hardest hit small businesses.
Paid Leave Credit
The bill extends paid sick and expanded Family and Medical Leave Act credits to eligible employers through September 30, 2021. ARPA also increases the limit on the credit for paid family leave to $12,000 per worker, increases the number of leave days a self-employed individual can take, and allows employees to use leave if they are getting vaccinated for COVID-19.
Employee Retention Tax Credit
The bill extends and expands the Employee Retention Tax Credit (ERTC), which helps employers retain and rehire workers, through December 31, 2021. ARPA makes the credit more generous for severely financially distressed employers and expands the credit to cover most new startups that were formed after February 15, 2020.
State and Local Government Support
The relief package provides $195.3 billion for states and $130.2 billion for cities and other local governments to help them cover revenue shortfalls caused by the pandemic and respond to the pandemic. This funding will help retain public workers, such as law enforcement and firefighters, and can be used to boost pay for low-wage essential workers or invest in water, sewer, and broadband infrastructure. Funding cannot be used to cut taxes or deposited into any pension fund.
FEMA Funeral and Disaster Aid
ARPA sets aside $50 million for FEMA’s Disaster Relief Fund, which states, tribes, and territories, as well as individuals and qualifying private nonprofits, can use to pay for personal protective equipment; vaccine distribution; sanitization of schools, public transit, and courthouses; health care overtime costs; and other needs.
Notably, the Coronavirus Response and Relief Supplemental Appropriations Act of 2021 provided $2 billion for FEMA to reimburse individuals and households for COVID-19-related funeral expenses. ARPA allows Disaster Relief Fund monies to be used to extend the funeral assistance program.
Violence Prevention and Response
The bill includes significant funding for family violence prevention and services and child abuse and neglect programs.
The bill provides over $30 billion for public transportation agencies to help sustain transit jobs and prevent severe cuts to transit services.
The bill also provides $1.5 billion for Amtrak to ensure it remains fully operational through the end of the fiscal year, ending furloughs and service cuts as Americans begin traveling more frequently.
Mental Health Support
ARPA approves $3.5 billion for the Substance Abuse and Mental Health Services Administration’s Substance Abuse Prevention and Treatment and Community Mental Health block grant programs. Within this pot are set asides in grant funding for community-based and behavioral health organizations and funding to support youth mental health and suicide prevention.
Mental Health Support for First Responders
The bill provides funding to help health care professionals and first responders cope with and address mental and behavioral health conditions stemming from their work during the crisis.
The bill sets aside $95 million for the U.S. Fish and Wildlife Service to improve early detection, response, and research into wildlife disease outbreaks; to care for captive endangered species; and to help address wildlife trafficking.
Health Outcome Disparities
This bill gives $100 million to the Environmental Protection Agency to identify and address disproportionate environmental harms on underserved communities and to update their air quality monitoring systems.
Addressing Maternal Mortality
For five years, the bill enables states to extend Medicaid and Children’s Health Insurance Program (CHIP) eligibility to pregnant women for 12 months postpartum.
Oversight of COVID relief
The bill provides $77 million for the Government Accountability Office and $40 million for the Pandemic Response Accountability Committee, which the CARES Act established, to oversee and account for relief spending.
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Please don’t hesitate to contact me with your questions. We’re in this together.