American Rescue Plan 2021
President Joe Biden announced an American Rescue Plan – an emergency legislative package to ‘rescue’ America and alleviate conditions worsened by the COVID-19 pandemic. Due to the crisis, more than 10 million Americans are unemployed, with 4 million being out of work for at least 6 months. This jobs crisis is especially severe in communities of colour. The 2021 American Rescue Plan is one part of President Biden’s Build Back Better plan. Biden’s plan also includes the American Jobs Plan and the American Families Plan. The American Rescue Plan was signed into law by Biden on March 11, 2021.
What does the American Rescue Plan include?
The $1.9 trillion American Rescue Plan aims to support and provide assistance to small businesses, public healthcare, housing security, the funding of vaccinations, and struggling communities in the US. Biden aims to foster economic recovery and racial justice. The proposed policies within the Rescue Plan are expected to halve child poverty.
More specifically, the plan will:
- Provide financial relief to working-class families who have suffered from the pandemic, with $1,400 per-person checks sent to households, housing and nutrition assistance, increasing the minimum wage, extending unemployment insurance, and expanding access to childcare and affordable healthcare.
- Mounting a national vaccination program, by setting up community vaccination sites nationwide and ensuring vaccination supply. Sick paid leave will be upped to contain the spread of COVID-19, disparities in healthcare will be addressed, and the majority of K-8 schools will safely be reopened. The vaccination programs don’t extend to Americans abroad, raising questions of equality, considering the onerous tax burden on expats.
- Support struggling communities by directly funding small businesses, especially those owned by entrepreneurs of color. In addition, the jobs of essential workers and first responders will be protected.
- Provide emergency funding to upgrade IT infrastructure and protect federal government data systems, as a national security measure in preventing future cyber-attacks.
Who qualifies for an American Rescue Plan?
The full $1,400 stimulus payments (called ‘Economic Impact Payments’) are available for individuals with an AGI (Adjusted Gross Income) of $75,000 or less annually. $2,800 is available for married couples so long as they have an AGI of $150,000or less annually. This amount builds on the $600 payments provided in the second stimulus package, totalling to a $2,000 mark. For those with AGI’s over these thresholds, the amount available will be reduced until AGI reaches the $80,000 mark for individuals or $160,000 mark for couples, when they will receive nothing.
Families will receive payments for all dependent children who are claimed on their tax returns; not just qualifying children under the age of 17.
How is the American Rescue Plan money being distributed?
Small businesses: $15 billion will be distributed in grants to over 1 million of the hardest hit small businesses to help them get back on their feet, reopen and rebuild.
Abuse victims: Biden is calling for $800 million funding for federal programs that help to protect survivors of domestic violence and sexual assault, which have been worsened by the pandemic as people were confined to their homes with their abuser.
Veteran health care: Biden is calling for an additional $20 billion for veteran care, ensuring their health is protected through the crisis.
Mental health and substance abuse: President Biden is further calling for $4 billion to support and expand mental health and substance abuse services.
TANF: Biden is calling for an additional $1 billion for states in order to cover additional cash assistance for the recipients of the Temporary Assistance to Needy Families (TANF).
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Will the CARES Act continue into 2021?
The American Rescue Plan has extended the CARES Act unemployment provisions from March to September 6, 2021. The new CARES Act III includes the Pandemic Unemployment Assistance (PUA) for self-employed individuals.
Several tax law changes implemented through the American Rescue Plan Act are set to expire at the end of 2021:
- The extra child tax credit for 2021 is $3,600 per child under the age of 6, and $3,000 per child aged 6 to 17, and is fully refundable and payable in advance. Unfortunately for expats, to be eligible the family must have lived in the United States for at least six months during 2021. The standard Child Tax Credit is still available to those living abroad, with the maximum refundable amount being US$1,400. The extra child tax credit is set to revert in 2022 to $2,000 per child ($1,400 refundable) aged under 17. Within the American Families Plan, Biden has proposed extending the increased child tax credit through to 2025.
- The child and dependent care tax credit was increased in 2021 and made refundable for some taxpayers, with a maximum credit of $4,000 for one qualifying individual, and $8,000 for two or more qualifying individuals. However, in 2022 this credit is set to become non-refundable and the maximum would decrease to $1,050 for one qualifying individual and $2,100 for two or more.
How is the American Rescue plan affecting the Earned Income Tax Credit?
The President has requested an extension of the Earned Income Tax Credit in order to help the lowest income workers. Biden wants to raise the limit for the credit for childless adults from roughly $530 to near to $1,500, raise the income limit and expand the eligible age bracket.
Does American Rescue Plan extend unemployment?
The Rescue Plan extends unemployment assistance from 50 weeks up to 73 weeks and extends emergency unemployment compensation from 24 to 53 weeks. The Plan also upgrades the unemployment insurance system in order to help workers receive benefits.