On March 11, 2021, President Biden signed into law the $1.9 trillion stimulus bill otherwise known as the American Rescue Plan Act of 2021. The law is intended to provide ongoing economic relief for much of the country still struggling with COVID-19.
Tax Law Changes
- Retroactively treats 2020 unemployment compensation up to a maximum of $10,200 as tax-free for taxpayers making less than $150,000 per year. The IRS will provide additional guidance on implementation of this change soon, including instruction for taxpayers who have already filed their 2020 tax returns.
- Provides a maximum recovery rebate of $1,400 per eligible individual ($2,800 per married couple) including $1,400 per dependent. Income limitations apply.
- Expands the child tax credit for 2021, now $3,000 per child seventeen years and younger ($3,600 per child under the age of six). Taxpayers can now receive the refundable credit in advance of filing their tax return.
- Increases the child and dependent care credit to $4,000 per qualifying child with a maximum of $8,000 for two or more children. The employer-provided assistance exclusion has also increased to a maximum of $10,500.
- Extends the payroll tax related credits established by the Families First Coronavirus Act for paid sick and family leave due to Coronavirus until September 30, 2021, including credits granted for the time-off needed for employees to receive their vaccinations.
- Codifies and extends the Employee Retention Credit provided under the CARES Act to qualified employers through the remainder of 2021.
- Makes student loan forgiveness tax-free through December 31, 2025.
- Revises the applicable percentages on the medical premium tax credit where taxpayers do not have to pay back their excess advanced premium credit in 2021 and 2022.
- Extends for one year through 2027 the excess business losses for non-corporate taxpayers.
- Excludes targeted Economic Injury Disaster Loans (EIDL) from gross income and will not deny deductions for expenses or basis increases.
For more information regarding these changes, please read the attached article here. The KFORD Group is happy to help you navigate through all of the specific requirements.
Other Law Changes
- Extends unemployment benefits up to $300 per week through September 6, 2021.
- Provides for an additional $7.25 billion for the Paycheck Protection Program (PPP loans) and broadens participation to larger non-profit entities and online only news outlets. The deadline to apply remains March 31, 2021.
- Provides for another $15 billion in the EIDL program, now called Targeted EIDL Advance Program loans.
- Establishes $25 billion in aid for a Restaurant Revitalization Program to provide up to $5 million grants for individual restaurants ($10 million for restaurant groups), bars, and other live venues.
- Allots $10 billion to state and local governments to assist small business and their private investment needs.
- Establishes $100 million toward Community Navigator grants to provide assistance to small businesses to ensure they are getting all of the aid they are entitled to receive.
- Note the minimum wage increase to $15 per hour did not make it into this Act.
This legislation also provides funding to support all sectors of our economy, including but not limited to public health, agriculture, science and nutrition, care for the elderly, and emergency housing and rental assistance. For more information on these provisions, please read the attached article here.
We at the KFORD Group are happy to discuss any of the non-tax legislative changes too. Please call us at 210-340-8351.