Traditionally, March brings the beginning of Spring. Longer days, warmer temperatures, Spring break trips and opening day at baseball parks across the county. However, in Washington DC, many celebrated Spring early with the signing of the American Rescue Plan on March 11, 2021.

The $1.9 trillion legislation is the third and potentially the last installment of government intervention in response to the COVID-19 pandemic. The legislation was passed on a party-line votes and President Biden signed the bill into law, kicking off a lengthy cross-country road show extolling the virtues of the Plan.

Key elements of the Plan include the direct payments, unemployment insurance, emergency paid leave, tax provisions, and grants to specific small businesses.

1.    Direct Payments – Stimulus

• Individuals earning up to $75,000 in annual income, heads of households earning up to $112,500 and couples with incomes up to $150,000 are eligible for $1,400 in cash payments.
• Stimulus payments phase out as incomes climb higher. Individuals with annual incomes of $80,000 or more, heads of households earning $120,000 and over and couples with incomes of $160,000 or more will not receive any payment.
• Eligible dependents, including adult dependents (college students) also each get $1,400.
• Social Security, Supplemental Security Income (SSI), Veterans Administration (VA) and Railroad Retiree benefit recipients automatically receive the payment, even if they do not normally file tax returns.

2.    Unemployment Insurance

• Emergency pandemic unemployment insurance is extended until September 6, 2021 and self-employed and part-time individuals may qualify for benefits.
• The weekly unemployment benefit remains at $300.
• Tax relief is provided up to $10,200 in income from unemployment benefits for households earning less than $150,000 a year.
• The total number of weeks individuals who are not able to return to work can collect benefits rises from 50 to 74.

3.    Emergency Paid Leave

• Tax credits are available through October 1, 2021, to employers who choose to offer paid sick leave and paid family leave benefits.

4.    Certain Tax Provisions

• Three tax increases on large corporations and wealthy individuals, collectively raising $60 billion in revenue were included in the Plan.
  – Publicly traded companies’ ability to deduct executive compensation from their corporate taxes is included in the Plan.
  – The Plan repeals obscure provisions in the tax code that gave multinational corporations additional discretion in accounting for interest expenses.
  – The Plan also extends “loss limitation” restrictions on unincorporated businesses.

5.    Grants to Specific Small Businesses

• $28.6 billion for a new grant program for restaurants and bars to meet payroll and other expenses. Individual businesses will be eligible for $5 million each.
• $15 billion for Emergency Injury Disaster Loans through the Small Business Administration. Priority would go to “severely impacted small businesses with fewer than 10 workers.
• $7 billion for the paycheck Protection Program, and an expansion of the eligibility criteria to some non-profit organizations previously excluded from the program.
• $3 billion for a payroll support program for aviation manufacturers. The industry itself will be responsible for funding half of the program, and the program will last six months.
• $1.25 billion in funding for the Shuttered Venue Operators Grant for music halls and other concert venues.
• $175 million for a Community Navigator Program to reach out to eligible businesses.        

The American Rescue Plan provides a significant amount of monetary and tax stimulus for a number of eligible Americans. Consequently, this Spring Break may prove to be the best many have ever experienced. The attorneys in our Austin and Dallas offices are available to answer any questions you may have.

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