On March 11, President Joseph Biden signed the American Rescue Plan Act of 2021, a $1.9 trillion COVID-19 relief package that provides significant federal aid for programs such as extended unemployment payments, vaccines, schools, and small businesses. The act also includes tax changes, including several revenue raisers.
In addition to the well-publicized tax benefits, such as a third round of direct stimulus checks and increases in the child tax credit, the earned income tax credit, and the dependent care credit, the act includes compensation and benefit tax-related relief, including extension and modification of the employee retention payroll tax credit and the payroll tax credit for paid sick and family leave, pension relief, and expansion of continuing health benefit coverage and the premium tax credit. Most of these tax benefits are set to expire after 2021, though it is possible that some could be made permanent.
The act also includes exclusion from gross income and other tax benefits for the following:
- Unemployment benefits of up to $10,200 received in 2020 for taxpayers with adjusted gross income of less than $150,000
- Certain student loan debt forgiven between 2021 and 2025
- Certain Small Business Administration Economic Injury Disaster Loans
- Restaurant revitalization grants