The President Signs American Rescue Plan Act of 2021 (ARPA HR1319)

The American Rescue Plan Act of 2021 (ARPA) is designed to aid Americans as we still navigate the economic impacts of the COVID-19 pandemic. The ARPA contains many tax components that include updates to:

  • Unemployment benefits
  • Recovery rebates
  • COBRA continuation coverage
  • The child tax credit
  • Earned income tax credit
  • The child and dependent care credit
  • Family and sick leave credits
  • Employee retention credit
  • Premium tax credit
  • Student loans
  • And additional miscellaneous tax provisions

There is a lot of information in this new law, we want to share a few of the highlights for quick reference:

  • Unemployment benefits are partially excludable from income. 
    1. The first $10,200 of unemployment benefits (per taxpayer)
    2. AGI is less than $150k (unemployment included in AGI)
  • Stimulus three is $1,400 per individual reported on a taxpayers return. Phase-out ranges have been reduced in comparison to rounds one and two, so the amount that the taxpayer would be eligible for will be reduced faster than previously.
  • Only for 2020, the Premium Tax Credit will NOT have to be paid back. 
  • Child Tax Credit has been expanded
    1. Only for 2021 – CTC includes a qualifying child that hasn’t turned 18 by the end of 2021.
    2. Only for 2021 – CTC is increased to $3,000 per child, $3,600 for child under age 6.
    3. Only for 2021 – Phase-out ranges have been increased.

As mentioned, this is a lengthy document with many updates. The Journal of Accountancy provides a detailed breakdown of how these tax related provisions may impact taxpayers outside of the highlights we list above. We recommend that you take a moment to review the article here.  

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