The American Rescue Plan Act-What it Means For You

$1,900,000,000,000. That is the check that Congress presented to President Joe Biden with The American Rescue Plan Act, and it was signed on March 11th. It is difficult enough to grasp the meaning of a billion dollars, let alone almost 2,000 times that number. For reference, if Congress decided to buy a $1.5 million home with this $1.9 trillion pot of money, it would cost them 0.00015% of their fortune or the equivalent of a one-time $0.38 cost for someone earning $250,000 per year.

A bill of this magnitude covers a plethora of issues and concerns. However, there are six pivotal sections of the legislation that will positively impact many Americans:

• $1,400 Checks: This will be the third “round” of stimulus checks that Americans receive. For single individuals earning up to $80,000, they will receive some payment amount (those earning under $75,000 will receive the full amount). Those taxpayers, who choose married filing jointly on their tax returns, will receive the full $2,800 if their income is below $150,000; payments phase out when joint income reaches $160,000.

• Child tax credit: This credit has been increased to $3,000/child or $3,600 for each child under the age of 6 and now includes children up to age 17. This credit is only on the books through next year, at which time Congress will have to renew it. For single individuals, the phase-out begins at $75,000, for heads of household at $112,500, and married couples filing jointly at $150,000.

• Unemployment benefits: Congress is extending the increased unemployment weekly benefit of $300 through September 6th. The bill also allows for up to $10,200 of benefits to be taken tax-free with household income under $150,000.

• Paycheck Protection Program (PPP): The eligibility has been expanded to include additional non-profits and limits the eligibility of “for-profit business” to those employing fewer than 300 persons. The timeline for applying has not been extended past the original due date of March 31st.

• Fight against COVID funding: The bill allotted $350 billion for states, local governments, territories, and tribal governments to fight COVID. Unfortunately, there are not many details on what “funding to fight COVID” means to Washington. It is probably a safe bet that many financial issues will be addressed with these funds.

• Cash for vaccines: Congress allotted $75 billion for vaccine purchase and distribution.

Beyond these six items, the legislation includes funding for Obamacare subsidies, child care, a bailout for union pensions, public transportation, airports, furloughed Amtrak employees, wages for aerospace companies, emergency rental assistance, Americans facing foreclosure, vouchers for public housing, the battle against homelessness, Americans struggling to pay utility bills, the Seaway International Bridge, and the National Endowment for the Arts and Humanities.

The American Rescue Plan Act is a historic piece of legislation. Not only is it more than double the size of FDR’s New Deal, but it was also passed to assist in the first pandemic in over a century. This bill is an all-encompassing bill with an incomprehensible price tag. While it is unknown if this will be the last of the “COVID” legislation, our team at Rather & Kittrell will continue to be aware of any new legislation and ensure it is accurately reflected in your financial plan. Please contact your advisor with any questions on how The American Rescue Plan Act directly affects you and your family.

To learn more, contact us at Rather & Kittrell.