American Rescue Plan Act 2021 (ARP Act)

The Act signed into law on March 11, 2021, is a $1.9 trillion COVID emergency economic relief package that is intended to assist individuals, businesses, schools, vaccines, states and anti-poverty programs during the ongoing coronavirus pandemic and accompanying economic crisis. It should also be noted that this package represents 1/10^th of the US economy as it is a colossal package. The package covers six key areas of support:

• Direct Relief Payments
• Unemployment Benefits
• Child Tax Credits
• Business Relief and Support
• Education Support
• Rental Assistance
• Public Health
• Other Provisions

Below is a summarized closer look at a few of the major provisions of the Act.

Direct Relief Payments

This will be the third economic impact payment to qualifying Americans.

The payment will be sent automatically via check or direct deposit. The amount of the relief payment is $1,400 per person. Individuals will also receive an additional $1,400 payment for each dependent claimed on their tax returns. The payments are phased out for those with an adjusted gross income (AGI) between $75,000 and $80,000 (single filer) and $150,000 and $160,000 (joint filers).

Unemployment Provisions

The act provides for federal unemployment insurance payments at the same level and will remain at $300 per week. However, the benefits will extend through September 6. The Act also makes the first $10,200 in unemployment payments nontaxable for households with incomes under $150,000. The text of the law does not provide a different threshold for single and joint filers. However, both spouses are entitled to consider $10,200 of their unemployment compensation nontaxable, for a total of $20,400 if both spouses receive such benefits.

Child Tax Credits

The legislation would temporarily expand the child tax credit, increasing the amount from $2,000 to $3,000 for children ages 6 to 17 and $3,600 for children under age 6. The amount is gradually reduced for individuals earning over $75,000 and couples earning over $150,000 per year. A key provision under the child tax credit provision is that families eligible for the full credit would get payments up to $300 per child per month from July through the end of the year in 2021.

Small Business Relief

The Act includes $28 billion of grants for eateries, which include restaurants, bars, halls, brew pubs, tap rooms, and tasting rooms. The program provides for up to $5 million per restaurant (physical location) or $10 million per restaurant group (maximum of 20 locations). A total of $5 billion of funding is reserved for restaurants with 2019 gross receipts of less than $500,000. The grant funds can be used to offset expenses from February 15, 2020, through the end of 2021, including payroll, benefits, rent, utilities, cleaning, equipment, food and other costs. This will operate as a Small Business Association (SBA) grant program.

The Act also designates $7.25 billion in new money for PPP loans and would allow more nonprofits to apply inclusive of larger nonprofits being eligible.

Education Support

There are over $128 billion in grants to state educational agencies, with 90% allocated to local educational agencies, plus $39 billion in grants to higher education institutions. Nearly $15 billion in funds are directed to the Child Care & Development Block Grant program to help support child care facilities, particularly in high-need areas.

While the Act does not provide for student loan forgiveness, it does contain a provision classifying certain student loan forgiveness between December 30, 2020 and January 1, 2026 as tax-free. This includes loans expressly for post-secondary educational expenses where the loan is insured or guaranteed by (i) the U.S. or an instrumentality or agency thereof, (ii) a state, territory or possession of the U.S. or the District of Columbia, (iii) an eligible educational institution and (iv) certain private education loans.

Rental Assistance

There is $25 billion for emergency rental assistance, including $5 billion for emergency housing vouchers for people experiencing homelessness, survivors of domestic violence and victims of human trafficking.

Public Health

The Center for Disease Control and Prevention is designated $7.5 billion to track, administer and distribute COVID-19 vaccines. Another $46 billion would go toward diagnosing and tracing coronavirus infections, and $2 billion would go toward buying and distributing various testing supplies and personal protective equipment.

Other Provisions

As mentioned above, there are a number of additional provisions associated with the American Rescue Plan Act. Information on these provisions can be found on the IRS.gov and Congress.gov.

• Additional provisions include:
• Child and Dependent Care Assistance
• Support for Low-Income Families
• Employer-Provided Dependent Care Assistance
• Extension of Sick Leave Pay and Family Medical Leave Pay Credits
• Employee Retention Tax Credits
• Federal Minimum Wage.