President Biden signed The American Rescue Plan Act, 2021 (ARPA) into law on March 11. The ARPA is a $1.9 trillion COVID-19 relief package designed to provide financial relief for American businesses and individuals.
The public health crisis caused by COVID-19 has resulted in a devastating economic crisis. All of this has affected millions of Americans, and no one has gone untouched. More than 9.5 million workers have lost their jobs with 4 million out of work for six months or longer.
The American Rescue Plan was created to begin repairing the effects of the pandemic and to deliver direct and instant relief to those impacted by this crisis. As one of the most progressive pieces of legislation in history, the hope is that the ARPA will be the road to economic recovery.
In this article, we’re going to summarize the main changes that have been implemented with this law, who it’s going to affect, and how it will bring relief.
One of the top priorities of the ARPA is to provide immediate and direct relief to working families who have had to bear the brunt of this global crisis. The American Rescue Plan will send $1,400 per person to households across the country. This will allow families to have access to funds for housing, nutrition, childcare, healthcare, and overall give families an emergency boost.
There has also been an increase in Child Tax Credit, which will substantially reduce the economic hardship placed on families by supplementing earnings. The credit amount has increased from $2,000 to $3,600 for children under the age of 6 and $3,000 for children under 18. The scope has been expanded to include children 17 and under, and advance payments will be made during 2021. The credit is also now fully refundable and has been extended to Puerto Rico and the U.S. Territories.
There have also been changes made to family and sick leave tax credits, child and dependent care credits, and more. To find more information, click HERE.
Small businesses have been disproportionately impacted by the pandemic. Across the country, communities are having to face the reality that their local businesses are closing their doors. This means that friends and family are laid off and that communities are significantly impacted as a result. Small business revenue is down 32 percent, and with many businesses hanging on by a thread, facilitating support of these businesses is essential. The goal is not just to help them get through this, but to rebuild a solid foundation for the future.
The American Rescue Plan allocates $10 billion to the State Small Business Credit Initiative (SSBCI). The State Small Business Credit Initiative works with lenders to support small businesses and non-profits by providing funding. This will allow businesses to have the ability to expand their economic opportunities, which will extend their reach.
One of the more unexpected realities of the pandemic is the absence of foundational conditions for network connectivity. This becomes a major problem since more and more people are moving their education and work online.
To compensate for this challenge, the American Rescue Plan is providing $10 billion to cover the costs of capital projects that fall into the category of strengthening network connectivity and access.
Currently, 1 in 10 homeowners with a mortgage are behind on payments. The American Rescue Plan is taking steps to help Americans keep roofs over their heads by allocating nearly $10 billion to provide relief for those homeowners who are most vulnerable.
In addition to that, the American Rescue Plan is providing $21.6 billion to assistant households that are unable to pay rent and utilities due to the pandemic.
The American Rescue Plan also plans to extend critical tax benefits to small businesses. The goal is to help businesses through the recovery process, help them to keep up on their payroll, and still facilitate positive health outcomes for employees.
The plan extends the Employee Retention Credit (ERC) for small businesses through December 2021. It also allows them to offset their payroll tax liabilities up to $7,000 per employee per quarter.
The availability of Paid Leave Credits has been extended through September 2021. This allows small businesses to offer paid leave to employees for illness, quarantine, or caregiving. Businesses can also take dollar-for-dollar tax credits equal to wages up to $5,000 if paid leave is offered for sick and family leave.
More people have lost their jobs during the pandemic than they have in the past several years before the COVID-19 outbreak. To help support those who have been impacted by the wave of unemployment that is sweeping the country, The American Rescue Plan waives federal income taxes on the first $10,200 of unemployment benefits received in 2020 by middle- and lower-income taxpayers.
To learn more about The American Rescue Plan Act, 2021 (ARPA), you can read President Biden’s official brief on the law HERE.