Understanding the American Rescue Plan: What It Means for You and Your Business
The American Rescue Plan, a $1.9 trillion relief package signed into law by President Joe Biden, marks a significant effort to help Americans and businesses recover from the economic fallout caused by the COVID-19 pandemic. While the journey to its passage was not without obstacles, the plan ultimately aims to provide much-needed assistance across various sectors.
Here’s a closer look at some of the key provisions and what they might mean for you or your business:
Direct Payments to Individuals
Once again, the government is issuing direct payments to Americans. Eligible recipients will receive $1,400 per person or $2,800 for couples, with additional funds for dependents. This time, the income thresholds are slightly more restrictive. Full payments are limited to individuals earning under $75,000 (or $150,000 for couples), and payments phase out completely at $80,000 (or $160,000 for couples). This measure is designed to provide direct financial relief to families struggling due to the pandemic.
Unemployment Assistance
For those who have lost their jobs, the American Rescue Plan extends vital unemployment benefits. The Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs continue to support gig workers, freelancers, and contractors, ensuring that financial assistance reaches those who need it most. Additionally, the plan enhances unemployment payments with an extra $300 per week through September 6, 2021.
Aid for Small Businesses
Small businesses have faced enormous challenges during the pandemic, and the American Rescue Plan allocates substantial funds to help them recover. The bill includes $15 billion for the Economic Injury Disaster Loan program and $28 billion in grants specifically for bars and restaurants. Additionally, an extra $7.25 billion is allocated to the Paycheck Protection Program, which has been a lifeline for many small businesses.
Housing and Rental Assistance
To prevent a housing crisis, the plan sets aside billions for renters and homeowners. This includes $22 billion for emergency rental assistance and $10 billion to help homeowners with mortgages, utilities, and property taxes. There’s also $5 billion to assist individuals at risk of homelessness.
Support for Schools and Child Care
Recognizing the impact of the pandemic on education, the bill provides $125 billion to help K-12 schools reopen safely. Funds are earmarked for protective equipment, ventilation improvements, and support staff. Private schools and colleges are also set to receive financial aid to assist in their reopening efforts and provide emergency grants to students.
Expanded Tax Credits
The American Rescue Plan includes significant changes to tax credits, most notably the Child Tax Credit, which has been increased to $3,000 per child under 18 and $3,600 per child under 6 for the 2021 tax year. Additionally, the Earned Income Tax Credit has been expanded for individuals without children, making it more accessible and beneficial.
Health Insurance Subsidies
To support those who have lost their jobs and health insurance, the plan subsidizes premiums under the COBRA program, allowing individuals to maintain their employer-sponsored coverage without paying premiums through September 2021. Furthermore, the bill increases premium subsidies for ACA Marketplace plans, making health insurance more affordable for millions of Americans.
Aid to State and Local Governments
The bill provides $350 billion in direct aid to state, local, tribal, and territorial governments, helping to stabilize budgets and prevent layoffs of essential workers. This funding is crucial for maintaining public services during the pandemic.
What’s Not Included
Despite the extensive provisions, some expected measures did not make it into the final bill. Notably, a proposed minimum wage increase to $15 per hour was removed due to Senate rules. Additionally, there is no extension of the eviction moratorium, which is set to expire at the end of March 2021.
Final Thoughts
The American Rescue Plan is a comprehensive effort to address the economic challenges posed by the COVID-19 pandemic. While the bill doesn’t cover every issue, it provides critical relief to individuals, businesses, and communities across the country. If you have questions about how the provisions of this bill might impact your personal or business finances, don’t hesitate to reach out for professional guidance.
Disclaimer: This article is intended for informational purposes only and does not constitute financial advice. For detailed advice tailored to your specific situation, please consult with a financial professional.
