Kelly Creed, CPA, Tax Stockholder in the Oakland office.
Kelly CreedCPA / Tax Partner / Co-Managing Director of Taxview bio

Brenda Colburn Jemmott, CPA, Stockholder and Oakland Office Head
Brenda Colburn JemmottCPA / Partner / Oakland Office Head/ Co-Managing Director of Taxview bio

President Biden Signs the American Rescue Plan

American Rescue Plan Banner

3/11/2021

The Key Tax Provisions and Highlights
of the $1.9 trillion American Rescue Plan

RINA Alert --  March 11, 2021 | Volume 19, Issue 7 

President Biden signed the $1.9 trillion coronavirus relief bill Thursday.

The massive package known as the American Rescue Plan includes individual and business tax provisions and allocates money for public health, anti-poverty programs, education, schools, small businesses, and industry support.
 
The key tax provisions of the bill include the following:
 
Individual tax provisions

  • Federal unemployment insurance payments will remain at $300 per week through September 6th and the first $10,200 in unemployment payments is nontaxable for the 2020 taxable year, for households with incomes under $150,000
  • A third round of Economic Impact Payments of $1,400 per individual and dependent (including dependents over age 17)
  • Increased and fully refundable Child Tax Credits and Dependent Care Assistance Credits for the 2021 taxable year
  • An increased employer-provided dependent care assistance exclusion
  • A five-year Cancellation of Debt exclusion for student loan forgiveness
  • Expansion and increase of the Earned Income Tax Credit
  • Expansion of the Sec. 36B premium tax credit for 2021 and 2022 by changing the applicable percentage amounts
  • Provides COBRA continuation coverage premium assistance for individuals who are eligible for COBRA continuation coverage between the date of enactment and Sept. 30, 2021

Business tax provisions

  • Extension and expansion of the Employee Retention Credit
  • Extension and expansion of the employer credits for paid sick and family leave benefits
  • Credits for providing subsidized COBRA benefits
  • Restaurant revitalization grants to cover restaurant business losses 

Some of the highlights of the bill include:

  • Public health – the CDC will receive:
    • $7.5 billion to track, administer and distribute COVID-19 vaccines.
    • $46 billion toward diagnosing and tracing coronavirus infections
    • $2 billion for buying and distributing various testing supplies and personal protective equipment
       
  • Anti-Poverty Programs – the bill provides $4.5 billion for the Low-Income Home Energy Assistance Program, known as LIHEAP, to help families with home heating and cooling costs. Also, there is $1.4 billion in funding for programs to support nutrition programs, community-based support programs and the National Family Caregiver Support Program. $25 billion will be for emergency rental assistance, including $5 billion for emergency housing vouchers for people experiencing homelessness, survivors of domestic violence and victims of human trafficking.
     
  • Education – 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 childcare facilities, particularly in high need areas.
    • The revised Senate version added a provision to make any student loan forgiveness passed between Dec. 31, 2020, and Jan. 1, 2026, tax-free — rather than having the forgiven debt be treated as taxable.
       
  • Small Business – The bill includes $7.25 billion in new money for the PPP small-business loan program and would allow more nonprofits to apply, including those groups that engage in advocacy and some limited lobbying. It also allows larger nonprofits to be eligible.
     
  • Industry support – there is a variety of provisions to offer support to different industries including, $30 billion for the transportation sector and $25 billion for a new SBA grant program for "restaurants and other food and drinking establishments” which will be discussed in a little more detail below.

Finally, since RINA has the privilege of working with many restaurants, we would like to highlight the Restaurant Rescue Plan, which will provide $28.6 billion in relief for small and mid-sized restaurants.
 
Woman Opening a RestaurantThe plan will provide up to $5 million in grants for individual restaurants, bars, caterers, breweries and tasting rooms or up to $10 million for restaurant groups. To qualify, restaurants must not be part of an affiliated restaurant group with more than 20 locations.
 
The first three weeks of the grant period would prioritize restaurants owned and operated by women, people of color and veterans. Additionally, one-fifth of the funding is set aside for businesses that grossed less than $500,000 in receipts in 2019.
 
The SBA is expected to open the fund grant applications within weeks.
 
Please reach out to your RINA professional for additional information or if you have any questions.

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