President Joe Biden on Thursday, March 11th, signed the $1.9 trillion COVID-19 relief package known as the American Rescue Plan into law, sending another jolt to the struggling econom. The legislation contains numerous measures championed by the National Association of REALTORS®, including those related to rental, housing, and small business assistance as well as extended unemployment benefits.
“While some notable changes were made as this bill worked its way through the Senate, all of the major provisions important to real estate remained intact,” Shannon McGahn, NAR’s chief advocacy officer, said in a statement. “It continues all of the successful and important provisions of the CARES Act, supporting small businesses, including the self-employed, independent contractors, and sole proprietors.”
What's in the Bill?
- $21.55 billion sent to states that can cover up to 18 months of expenses for individuals related to rent or utility payments
- States can put up to 10% of the funds they receive toward housing stability services.
- Appropriates $9.961 billion for the Homeowners Assistance Fund to states, territories and tribes to help homeowners at 100 percent of national AMI to pay mortgage, taxes, insurance, HOA/condo fees, and reimburse state and local governments that provided the same support in order to prevent homeowner displacement.
- If you made less than $150,000 last year, the first $10,200 of unemployment benefits received is tax-exempt. If you have already filed your 2020 federal return, you will need to amend that return to capture a refund.
- $1,400 per single taxpayers including dependents earning less than $75,000 (married taxpayers earning less than $150,000).
- Payments phase out fully at $80,000 single and $160,000 married. Calculate your rebate here.
- Your 2019 federal tax return will be the income measure unless you have already filed your 2020 federal return.
- An additional $7.25 billion for the Paycheck Protection Program & support for restaurants.
Child Tax Credit
- Changes apply to 2021 only.
- $3,600 per child credit ages 0-5, $3,000 per child credit ages 6-17.
- Credit phase out once income hits $75,000 for single taxpayers, $112,500 for head of household taxpayers, and $150,000 for married taxpayers.
- IRS to estimate monthly advance payments to taxpayers with a reconciliation of actual credit eligibility made on the 2021 federal tax return.
Child and Dependent Care Credit
- Changes apply to 2021 only.
- Credit increased to $4,000 per child with an overall maximum of $8,000.
Emergency Section 8 Vouchers
- Appropriates $5 billion for incremental emergency vouchers, renewals of vouchers, and fees for administering voucher programs through September 30, 2021.
Family and Sick Leave
- Employer payroll credit up to $12,000 per employee for COVID-related sick leave.
- Benefit extended to September 30, 2021.
- COVID vaccination leave is eligible.
Employee Retention Credit
- Extends the credit eligibility period through the end of the year.
- Quarterly revenue decline triggering eligibility is 20%. (Consolidated Appropriations Act)
- Eligible wages are $10,000 per employee per quarter. (Consolidated Appropriations Act)
- Credit percentage is 70% of eligible wages (Consolidated Appropriations Act), resulting in a possible credit per employee of $28,000.
Premium Tax Credit Expansion
- Modifies the affordability percentages used for 36(B) premium tax credits for 2021 and 2022 to increase credits for individuals eligible for assistance under current law and provides 36(B) credits for taxpayers with income below 400 percent of the federal poverty line.
Student Loan Relief
- Provides that all COVID-19 student loan tax relief is not included in taxable income.