• 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

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

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