March 31st, 2021
American Rescue Plan Act of 2021 Enacted
Author: David S. De Jong
On March 11, 2021 President Biden signed into law a new COVID relief package which included a number of tax provisions:
- A $1,400 credit for individual taxpayers with an additional $1,400 for each dependent with the credit totally phased out at adjusted gross income of $80,000 for single individuals, $120,000 for heads of household and $160,000 for married couples and with advance payments tied to the 2020 return if filed or otherwise to 2019.
- An exclusion for 2020 of the first $10,200 in unemployment benefits received by an individual.
- A complex enhancement for 2021 of the child tax credit, dependent care credit and earned income credit.
- An increase for 2021 in the maximum exclusion for employer-paid dependent care.
- An extension of the employer payroll tax credit for paid sick and family leave through September 30. 2021 with a restart on April 1 of the 10-day maximum, an increase from $10,000 to $12,000 in maximum benefits and an inclusion of time off for vaccinations.
- An extension and increase of the employee retention credit for six months through December 31, 2021.
- An expansion for 2020 and 2021 of the health insurance premium tax credit.
- An increased time period from seven to 15 years for defined benefit plans to make up certain actuarial shortfalls effective 2019 plan years.
You can find more on issues affecting businesses and individuals in our COVID-19 Resource Center.