For Americans struggling financially because of the COVID-19 pandemic, President-elect Joe Biden’s economic stimulus package would provide welcome relief. On Thursday, Biden released details on his “American Rescue Plan,” which is a $1.9 trillion plan designed to “rescue the American economy and start beating the virus.” (Next month he’ll release his “Build Back Better Recovery Plan” to generate more economic growth.) In addition to providing funding for vaccination distribution, school reopening, state and local governments, small businesses, and more, Biden’s rescue plan would expand some of the previously enacted COVID-relief measures for ordinary Americans and add a few new ones.
But where do you fit in? Would you get any financial assistance if Biden’s stimulus package is eventually enacted into law? To help you answer that question, we outlined 12 provisions in Biden’s American Rescue Plan that could put (or keep) some extra money in your pocket. At this point, it’s too early to say if this stimulus package (or parts of it) will get through Congress. And, even if it does, it could be weeks or even months before that happens. But the smart move is to start familiarizing yourself with the plan now so that you can act quickly if it does become law.
$1,400 Stimulus Checks
The COVID-Related Tax Relief Act, which was enacted in December, authorized a second round of $600 stimulus checks. (The CARES Act allowed a first-round payment of $1,200.) But even before the COVID-relief bill was signed, lawmakers started calling for more money. As a result, the CASH Act was introduced and passed in the House of Representatives. That bill would have increased the $600 payments to $2,000 payments by authorizing a third-round stimulus payment of $1,400 ($600 + $1,400 = $2,000). The CASH Act died in the Senate without a vote…but Biden now wants to revive the idea and send eligible Americans another stimulus check for $1,400.
The Biden plan also calls for an expansion of the additional amount tacked on for dependents. For the first- and second-round stimulus checks, eligible Americans receive an extra $500 (first-round checks) or $600 (second-round checks) for each dependent child age 16 or younger. Under the president-elect’s plan, the additional payments would be available for any dependent, regardless of age.
$15 Minimum Wage
Although it’s not strictly COVID-related, Biden’s plan calls for upping the federal minimum wage to $15 per hour. That’s more than double the current rate of $7.25 per hour. Biden also wants to end the tipped minimum wage and sub-minimum wage for people with disabilities.
Twenty-nine states and the District of Columbia already have a minimum wage that’s higher than $7.25 per hour. D.C.’s rate is $15 per hour, which is higher than any state’s current minimum wage (not including any local government minimum wage requirements).
Finding and affording childcare is one of the more difficult challenges workers are facing during the pandemic. To help address the childcare affordability crisis, Biden wants to expand the childcare tax credit for one year. Currently, if your children are younger than 13, you’re eligible for a 20% to 35% credit for up to $3,000 in child-care expenses for one child or $6,000 for two or more. The percentage decreases as income increases. Under Biden’s plan, families would get a refundable tax credit for up to 50% of their childcare costs for children under age 13, not to exceed $4,000 for one child or $8,000 for two or more children. The full 50% credit would be allowed for families making less than $125,000 a year. All families making between $125,000 and $400,000 would receive a partial credit, so they would receive a benefit at least as generous as what they can receive today.
In addition, Biden wants to pump an additional $15 billion into the Child Care and Development Block Grant program to, among other things, help people who are furloughed or laid off during the pandemic and are struggling to afford childcare. The program received $10 billion in funding in December, too.
Child Tax Credit
Another way to help families with children is to increase the child tax credit. Right now, the credit is worth $2,000 per child age 16 or younger. The credit begins to disappear as income rises above $400,000 on joint returns and above $200,000 on single and head-of-household returns. For some lower-income taxpayers, the credit is “refundable” (up to $1,400 per qualifying child), meaning that if it’s worth more than your income tax liability, the IRS will issue you a refund check for the difference.
President-elect Biden is calling for a one-year expansions of the credit. Specifically, he wants to make the credit fully refundable, increase it to $3,000 per child ($3,600 for a child under age 6), and allow the credit for 17-year-old children.
Earned Income Tax Credit
The earned income tax credit (EITC) provides an incentive for people to work. For 2020 tax returns, the maximum EITC ranges from $538 to $6,660 depending on your income and how many children you have. (For 2021 returns, the range will be $543 to $6,728.) There are income limits for the credit. For example, if you have no children, your 2020 earned income and adjusted gross income (AGI) must each be less than $15,820 for singles and $21,710 for joint filers. (For 2021, those income limits rise to $15,980 and $21,920, respectively.) If you have three or more children and are married, though, your 2020 earned income and AGI can be as high as $56,844 ($57,414 in 2021). People can use their earned income from 2019 to determine the EITC for the 2020 tax year.
President-elect Biden is calling for an expansion of the EITC for one year. Among other things, he wants to raise the maximum credit amount for childless adults to around $1,500, raise the credit’s income limit for singles to about $21,000, and eliminate the age cap for older workers so that they can claim the credit too. Biden also doesn’t want people who have lower earnings in 2021 because the pandemic to experience a reduction of the EITC.
Premium Tax Credit
Obviously, during a pandemic, it’s a good thing to have as many people as possible covered by a health insurance plan. We already have the premium tax credit, which helps eligible lower-income people pay for health insurance purchased through the marketplace. The credit amount is estimated when you go on a marketplace website such as healthcare.gov to buy insurance. You can choose to have the credit paid in advance directly to the health insurance company to lower your monthly payments. You then have to attach IRS Form 8962 to your tax return to compute your actual credit, list any advance subsidy paid to the insurer and then reconcile the two figures.
Biden wants to boost the nation’s health insurance coverage rate by making the premium tax credit more attractive. He supports increasing the value of the credit to ensure that people buying health insurance through the marketplace don’t pay more than 8.5% of their income for coverage.
College Financial Aid
It’s been a rough year for students of all ages – including college students. But there might be some additional financial aid available to certain college students in the form of emergency grants to students in need if Biden’s stimulus package becomes a reality.
Part of the president-elect’s plan is to send $35 billion to public institutions of higher learning, including community colleges, public and private historically black colleges and universities, and other minority serving institutions. This funding will, in part, provide up to $1,700 in additional financial aid for millions of students.
Paid Family and Sick Leave
We don’t want sick or potentially infected people going to work simply because they don’t want to miss a paycheck. To address this concern, paid sick and family leave for many workers affected by the coronavirus outbreak was expanded by the Families First Coronavirus Response Act, which was enact back in March. Under that law, employers with fewer than 500 workers were required to provide up to 80 hours of paid sick leave to employees affected by the virus. Workers could take paid leave if they are sick or quarantined, or if they had to stay home to care for someone else. Leave could also be taken to care for minor children who were home from school. The law also extended the existing Family and Medical Leave Act to cover a worker’s absence to care for a child home from school or daycare. To shift most of the financial burden for paid leave off the employer’s back, tax credits were also made available to reimburse employers for some of the cost.
While the employer tax credits were extended through March 2021, the requirement that employers provide paid leave was not. As a result, Biden wants to:
- Extend the paid leave requirements and eliminate exemptions for employers with more than 500 and less than 50 employees;
- Make sure healthcare workers and first responders get these benefits;
- Provide over 14 weeks of paid sick and family and medical leave for parents when a child or loved one’s school or care center is closed, people who have or are caring for people with COVID-19 symptoms or who are quarantining due to exposure, and people needing to take time to get the vaccine;
- Expand emergency paid leave to include federal workers;
- Provide a maximum paid leave benefit of $1,400 per-week for eligible workers (this will provide full wage replacement to workers earning up to $73,000 annually);
- Reimburse employers with less than 500 employees for the cost of leave;
- Reimburse state and local government for the cost of leave; and
- Extend emergency paid leave measures until September 30, 2021.
Mortgage Foreclosure and Eviction Relief
For anyone laid off from work or otherwise suffering financially because of the pandemic, losing the roof over your head is one of the scariest outcomes. According to the Biden team, 20% of renters and 10% of homeowners with mortgage are behind on their payments. There’s already a federal eviction moratorium in place until January 31, but many people fear a wave of evictions will begin in February.
To prevent a spike in evictions, Biden is calling for an extension of the eviction and foreclosure moratoriums in place through September 2021. He’s also asking for an additional $25 billion in rental assistance, especially for low- and moderate-income Americans who are out of work. Biden wants $5 billion to cover home energy and water costs for struggling renters, too.
Supplemental Nutrition Assistance Program (SNAP)
In December, food assistance available under the Supplemental Nutrition Assistance Program (SNAP) were increased by 15% from January 1 to June 30, 2021. In most states, a family of four receiving the maximum in SNAP benefits will receive $782 per month for the first half of 2021. That’s an increase of $102. (Higher amounts are available for residents of Alaska and Hawaii.)
President-elect Biden is wants to extend this benefit increase through September 2021. In addition, he wants to continue SNAP benefits at the increased rate for the duration of the pandemic – at least. The Biden administration will work with Congress to automatically adjust the length and amount of this relief depending on health and economic conditions in the country.