The American Rescue Plan Act has passed: What’s in it for you?

On Thursday, March 11th, President Biden signed the latest legislation to provide economic and other relief from the COVID-19 pandemic that has haunted the country for the last year. The 628-page American Rescue Plan Act (ARPA) includes $1.9 trillion in funding for individuals, businesses, and state and local governments.

The ARPA extends and expands some of the CARES Act’s critical provisions and the Consolidated Appropriations Act (CAA). It also includes some new provisions that should come as welcome news to many families and businesses.

Key provisions for businesses, other employers, and individuals

Here’s a broad overview of some of the provisions that may affect you:

Businesses and other employers
  • Pandemic assistance grants will be made to eligible businesses serving food or drinks, including restaurants and food trucks.
  • There will be additional funding for forgivable loans to eligible businesses under the Paycheck Protection Program (PPP), which is currently scheduled to expire on March 31, 2021.
  • Nonprofit organizations will receive expanded PPP eligibility.
  • New targeted Economic Injury Disaster Loan grants will be available for eligible small businesses in low-income communities.
  • The Employee Retention Tax Credit is extended for eligible employers that continue to pay employee wages during COVID-19-related closures or experience reduced revenue through December 31, 2021. This includes “recovery startup businesses” (those launched after February 15, 2020, with average annual gross receipts of $1 million or less).
  • Tax credits for paid sick and family leave are modified and extended to September 30, 2021.
  • The excess business loss limitation is extended through December 31, 2026.
  • Section 162(m) limits on the tax deduction that public companies can take for executive compensation are extended to cover the CEO, the CFO, and the five next highest-paid employees, beginning in 2027.
Individuals
  • Additional direct payments (or recovery rebates) of $1,400 — plus $1,400 per dependent (including adult dependents) will be made to eligible individuals. To qualify, individuals must have an adjusted gross income (AGI) of up to $75,000 per year ($150,000 for married couples filing jointly and $112,500 for heads of households). The payments phase out and are no longer made when AGI exceeds $80,000 for individuals, $160,000 for married joint filers, and $120,000 for heads of household.
  • For eligible individuals, the Child Tax Credit (CTC) increases to $3,000 for each child age six to 17 and $3,600 per year for children under age six. To be eligible for the full payment, you must have a modified AGI of under $75,000 for singles, $112,500 for heads-of-households, and $150,000 for joint filers and surviving spouses. The credit phases out at a rate of $50 for each $1,000 (or fraction thereof) of modified AGI over the applicable threshold.
  • Parents will begin receiving advance payments of part of the CTC later this year. Under the ARPA, the IRS must establish a program to make monthly payments (generally by direct deposits) equal to 50% of eligible taxpayers’ 2021 CTCs, from July 2021 through December 2021.
  • Some taxpayers who aren’t eligible to claim an increased CTC in 2021 because their income is too high may be able to claim the regular CTC of up to $2,000, subject to the existing phaseout rules.
  • For 2021, there’s an expanded child and dependent care tax credit of up to $4,000 for childcare expenses for one child and up to $8,000 for two or more children for households making up to $125,000.
  • Any student loan debt forgiven between December 31, 2020, and January 1, 2026, will receive tax-free treatment.
  • An additional $300 per week in unemployment benefits will be paid through September 6, 2021. The first $10,200 in unemployment benefits received beginning in 2020 isn’t included in gross income for taxpayers with AGIs under $150,000. (However, for joint filers below the AGI limit, the $10,200 exclusion applies separately to each spouse.)
  • There’s expanded availability of and increased Affordable Care Act (ACA) subsidies for those who obtain insurance in the ACA marketplaces for 2021 and 2022.
  • Federal rental assistance is included for families affected by COVID-19, applicable to past due rent, future rent payments, utility, and energy bills.
  • There’s expanded eligibility for low-income individuals with no qualifying children to claim the Earned Income Tax Credit.

Make the most of the benefits

With vaccination rates climbing, the ARPA may be the last of the major legislative relief packages addressing the pandemic’s effects. We’d be pleased to provide you with more information on how you can make the most of the benefits available to you, your family, or your business.  Call your ATKG advisor for more details.

Annette Goodson is a Tax Director for ATKG. She serves as the lead of the firm’s State and Local Tax practice. She brings more than 25 years of public accounting experience to the team in the areas of federal tax, state tax and recruiting. Annette is a Certified Public Accountant and received her bachelor’s degree in accounting from The University of Texas at San Antonio.

For further information on this topic or other tax questions please contact Annette Goodson or a member of our Tax practice at 210.733.6611 or agoodson@atkgcpa.com.

testimonials

‘‘My father and I have used ATKG since the days of its founder James Ahern, and they have always provided excellent and accurate advice.’’

A Client

‘‘I can't name just one reason about Eric and Hayley! Their proactivity, creativity, collaborative spirit, and communication are all absolutely incredible.’’

A Client

‘‘Everyone that I have worked with at ATKG is extremely friendly, helpful, and always very responsive!’’

A Client

‘‘We appreciate ATKG's responsiveness, timeliness, and good communications’’

A Client

‘‘Very personable and knowledgeable. Over the years, I have created great relationships with Teryn Grater, Diane White, and the seniors and managers on my account.’’

A Client

‘‘I call them my ATKG team!’’

A Client

‘‘I couldn't be happier with the choice to move from EY to ATKG. A.J. Sturm, Diane White, Alisha Bell, and the support staff have been instrumental in helping me with a complicated Estate and Foundation scenario. Not only have they provided me with phenomenal accounting and tax advice, but they have also gone above and beyond to help me plan for today, tomorrow, and far beyond. Thank you, ATKG!!!’’

A Client

‘‘We continue to consider ATKG a part of our personal and business planning team. They are a professional firm with an impeccable level of service.’’

A Client

‘‘ATKG is very professional, responsive, and client-oriented. They are committed and make a point to communicate with annual meetings and anytime I have a question.’’

A Client

‘‘Angie Stone and her team provided valuable forensic accounting services and excellent litigation support in some complex family law cases handled by our firm.’’

A Client

‘‘Angie Stone and Courtney Mastin are prompt in their response to any inquiry our clients or I may have. Additionally, everyone at ATKG maintains a wonderful level of professionalism.’’

A Client

‘‘Great people, good response time, and helpful’’

A Client

‘‘Excellent customer service. Rapid response to questions!’’

A Client

‘‘Great people and very informative, up-to-date with ever-changing rules and guidelines in this ever-changing government!’’

A Client

‘‘ATKG is invested in my success and is highly responsive to my needs.’’

A Client

‘‘ATKG offers great customer service.’’

A Client

‘‘Prompt service and excellent forecasting. I also feel that I get tremendous support, more than I have received in the past.’’

A Client

‘‘Katie provides great service and is very knowledgeable.’’

A Client

‘‘Been working with ATKG for several years; they are extremely professional, knowledgeable and offer great customer service.’’

A Client

‘‘ATKG provides services up and above any other accounting firm I have ever used. They want to help their clients manage their wealth and offer to help teach their children about wealth and how to manage it.’’

A Client

‘‘She is friendly, responsive, and knowledgeable.’’

A Client

‘‘David and the ATKG team are knowledgeable regarding current tax issues, and they are extremely responsive to all questions.’’

A Client

‘‘A. J. is professional, knowledgeable, and provides friendly assistance.’’

A Client

‘‘Eric and Sarah do an excellent job handling our account and promptly answering questions. They are proactive in planning meetings and looking forward.’’

A Client

‘‘Our ATKG team, which includes Eric, Ruth, Katie, and Shannon is incredibly knowledgeable, professional, and supportive of our business. Client service always feels like it is at the forefront of their mind.’’

A Client

‘‘Loyal, excellent service over 35 years with Melanie and her team.’’

A Client

‘‘Our interactions with Diane and the ATKG team are always a model for how a professional services company should interact with its clients. With ATKG, we know that our finances are in good hands.’’

A Client

‘‘Melanie, Teryn, and Sandy have clearly had my and my family's best interests at the forefront. I have had a 19-year relationship that has proved to be very beneficial to my family and me.’’

A Client

‘‘Melanie, Teryn, and Katie offer us confidence.’’

A Client

‘‘Diane and Shannon are a critical resource and partner to our firm. They are knowledgeable, responsive, and dependable on all levels.’’

A Client

‘‘Diane and Shannon provide great service. They are very knowledgeable and are always willing to assist our group with sage advice.’’

A Client

‘‘Teryn is always quick to respond to questions and on top of the latest accounting rules.’’

A Client

‘‘Amanda and Shannon offer us consistent communication’’

A Client

‘‘Great work, timely, and the best part....nice folks!’’

A Client