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President Biden signed the $1.9 trillion American Rescue Plan Act into law. The COVID-19 relief bill was previously passed and approved by the Senate and the House of Representatives.
The bill allocates $350 billion to state and local governments, $49 billion for expanded COVID-19 testing and research, and $14 billion for vaccine distribution. The bill was amended from previously suggested packages to remove the $15 federal minimum wage provision, to bring supplemental unemployment benefits back down to $300 per week through Labor Day, and a lowered phase-out threshold for direct payments to individuals.
The American Rescue Plan Act extends the employee retention tax credit through December 31, 2021, and modifies the credit so it can only be claimed against the hospital insurance tax beginning after June 30, 2021. The relief bill extends tax credits for employers who voluntarily offer their employees paid sick and medical benefits related to COVID-19 through September 30. Additionally, the American Rescue Plan Act expands the Child Tax Credit for 2021 to $3,000 per child ($3,600 per child under the age of 6) and children age 17 will now be eligible. The tax credit will be fully refundable.
The bill also adds over $7 billion to the Paycheck Protection Program (PPP) and $15 billion to the Economic Injury Disaster Loan (EIDL) program. Existing eligibility rules remain in place for small businesses seeking to participate in the PPP.
The relief package also includes a direct $1,400 stimulus payment for individuals earning up to $75,000 and married couples earning up to $150,000. The payments phase out after $80,000 for individuals and $160,000 for couples.
