American Rescue Plan Act

The American Rescue Plan Act of 2021 (“ARPA”) is the latest federal COVID-19 relief bill, which the President signed into law March 11, 2021. 

The ARPA expands on some of the critical provisions in the CARES Act and the Consolidated Appropriations Act and is aimed to aid individuals, businesses as well as state and local governments.  A summary of the ARPA is provided below. 

The APRA provides funding for:

  • agriculture and nutrition programs, including the Supplemental Nutrition Assistance Program (SNAP, formerly known as the food stamp program)
  • schools and institutions of higher education
  • child care and programs for older Americans and their families
  • COVID-19 vaccinations, testing, treatment, and prevention
  • mental health and substance-use disorder services
  • emergency rental assistance, homeowner assistance, and other housing programs
  • payments to state, local, tribal, and territorial governments for economic relief
  • multiemployer pension plans
  • small business assistance, including specific programs for restaurants and live venues
  • programs for health care workers, transportation workers, federal employees, veterans, and other targeted populations
  • international and humanitarian responses
  • tribal government services
  • scientific research and development
  • state, territorial and tribal capital projects that enable work, education, and health monitoring in response to COVID-19
  • health care providers in rural areas

The ARPA also includes provisions that:

  • extend unemployment benefits and related services
  • make up to $10,200 of 2020 unemployment compensation tax-free
  • make student loan forgiveness tax-free through 2025
  • provide a maximum direct payment of $1,400 per eligible individual
  • expand and otherwise modify certain tax credits, including the child tax credit and the earned income tax credit
  • provide premium assistance for certain health insurance coverage
  • require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children's Health Insurance Program

Below is an overview of some of the key provisions of the ARPA:

  • Direct Payments: Provides a round of direct payments of $1,400 for individuals, $2,800 for joint filers, plus $1,400 for each qualifying dependent (which includes full-time students younger than 24 and adult dependents).  The payments would begin to phase out for individuals with an adjusted gross income (“AGI”) of $75,000 ($150,000 for couples filing jointly) and would phase out completely when AGIs exceed $80,000 ($160,000 for couples filing jointly) or more.  Heads of households will receive the full amount if they earned up to $112,500, and will phase out completely at $120,000.  Payments would be based on 2019 or 2020 tax returns
  • Child Tax Credit:  Increases the Child Tax Credit maximum amount to $3,000 per child between the age of 6 and 17 and $3,600 for children under age 6. The increase in the maximum amount would begin to phase out at $150,000 in income for joint filers, $112,500 for heads of households and $75,000 for singles
  • Employee Retention Credit: Extends the employee retention credit established by the CARES Act through December 31, 2021 to eligible employers, which includes eligibility for the credit to new startups that were established after February 15, 2020, and companies if their revenue declined by 90% compared to the same calendar quarter of the previous year
  • PPPThe ARPA appropriates $7.25 billion in additional funding for the Paycheck Protection Program (“PPP”).  Additional covered non-profit entities and larger not-for-profits are now eligible for a PPP Loan.  The PPP is set to expire on March 31, 2021
  • EIDLThe ARPA appropriates$15 billion for targeted Economic Injury Disaster Loan (“EIDL”) advance payments.  Funds to businesses located in low-income communities that have no more than 300 employees and that have suffered an economic loss of more than 30%, as determined by the amount that the entity’s gross receipts declined during an eight-week period, between March 2, 2020 and December 31, 2021, relative to a comparable eight-week period immediately preceding March 2, 2020
    • Providers of Food and Drink:  The ARPA appropriates $28.6 billion for restaurants, bars, and other eligible providers of food and drink.  The aggregate amount of grants made to an eligible entity and any affiliated businesses of the eligible entity shall not exceed $10,000,000; and shall be limited to $5,000,000 per physical location of the eligible entity
    • Paid Sick and Family LeaveTax credits for paid sick and family leave are modified and extended through September 30, 2021
    • Treatment of Student Loan ForgivenessAny student loan debt forgiven between December 31, 2020, and before January 1, 2026, will receive tax-free treatment
    • Rental Assistance ProgramsThis fund will allow state and local governments to provide grants to eligible households, which can be used to pay for rental assistance and utility fees
    • Child and Dependent Care CreditFor 2021 only, the child and dependent care credit has been expanded by making the credit refundable and increasing the benefit up to $4,000 for one eligible individual and $8,000 for two or more eligible individuals for households making up to $125,000

The APRA in its entirety can be located here:  Text - H.R.1319 - 117th Congress (2021-2022): American Rescue Plan Act of 2021 | | Library of Congress

The Attorneys at Levene Gouldin & Thompson, LLP are available to provide advice and counsel concerning these new statutory obligations and other matters related to COVID-19.

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