- President Biden’s American Rescue Plan (ARP): a $1.9 trillion stimulus package to address economic public health impacts of the pandemic
- ARP will bring about several edits to the Internal Revenue Code, and interesting tax implications for American taxpayers
1.LARGER STIMULUS CHECKS
- Increased stimulus for low-to-mid income households
- Supplementing $1400 to the previous $600 payments for a $2000 total
- Extending stimulus to include adult dependents and mixed immigration status households
2.UNEMPLOYMENT PAYMENTS
- Raise unemployment payments to $400/week through September 2021
3.FAMILY LEAVE & SICK PAY
- Reimplement provisions from the Families First Coronavirus Response Act (Feb 2020) to require employers to pay for 2 weeks of sick leave and 10 weeks of family leave for COVID-19-related situations
- Eliminate the 50-employee minimum, but keep the 500-employee cap
- Increasing total max leave to 14 weeks and max benefit of $1400/week
- Extend benefit to include frontline workers
- Continued provision: employers to receive a payroll tax credit in the same amount of paid sick leave
4.CHILD TAX CREDIT & DEPENDENT CARE CREDIT
- Establish a Child Tax Credit for 2021: fully refundable credits of $3000/ child ages 6-17, $3600/child under 6
- Increase Child & Dependent Care Credit for 2021: fully refundable credit of $4000/child, $8000 for 2+ children; would begin to phase out for household incomes of $125K+, cap at incomes $400+; those with a low tax liability can earn an extra $8000
5.MINIMUM WAGE RAISE
- Raise federal minimum wage from $7.25 to $15/hour
6.FREE COLLEGE TUITION
- Free tuition granted for households earning less than $125K/year
7.SMALL BUSINESS GRANTS
- $15 billion set aside for grants; goal to reach and assist over 1 million small businesses
8.MADE IN AMERICA BENEFITS
- The federal government will be required within 4 years to purchase a total of $400 billion in American-made products (e.g., medical supplies and other pandemic necessities)
- 10% “Made in America” tax credit to encourage hiring within the US
9.WORKER TRAINING PROGRAMS
- $50 billion on worker training programs like apprenticeships and community college courses
10.EARNED INCOME TAX CREDIT
- Expand the Earned Income Tax Credit for 2021: increase max credit for childless persons to approx. $1500; increasing income limit eligible for the credit to approx. $21,000; expanding age range eligible by eliminating the cap on older workers
11.INCREASED SPENDING ON SUSTAINABILITY
- Taxing high earners and profitable organizations to allow for increased spending on clean energy, infrastructure, technology
12.RENTAL ASSISTANCE
- $30 billion in rental assistance and an extension on the eviction moratorium through September 2021
How might these proposed changes affect future tax rates? Call our office at 516-541-6549 to share your thoughts or visit our website for more news and updates.
Sincerely,
Devin McQuillan
Associate, Creative Solutions
Contact:
516-541-6549 | Email