Yesterday, President Biden signed into law the American Rescue Plan Act (the “Act”). The Act provides approximately $1.9 trillion in further stimulus to individuals and businesses as well as state and local governments. Selected highlights of the new law are summarized below.
For businesses, the benefits include:
- Employee Retention Credit (ERC): The ERC was extended through December 2021. The credit percentage (70 percent) and the qualifying wage maximum ($10,000 per employee per quarter) remain the same, however by extending the program through the end of the year the maximum credit per employee for 2021 is now $28,000 ($7,000 per quarter per employee).
- FFCRA Paid Sick and Family Leave Tax Credit: For those employers who offer paid sick and family leave, the FFCRA credit is extended through September 30, 2021 and available up to a maximum of $12,000.
- Additional Small Business Loan and Grant Funding: The Act extended and created the following:
- $7 billion in additional loan funds available under the Paycheck Protect Program (PPP).
- $15 billion in funding under Economic Injury Disaster Loan (EIDL) advance payments of $10,000 for businesses located in low-income communities that have no more than 300 employees and that have suffered an economic loss of more than 30%.
- $25 billion in grants for restaurants and bars in amounts equal to the pandemic-related revenue loss for the eligible entity, up to $10 million per entity or $5 million per location.
For individuals, the benefits include:
- Recovery Rebates: The Act authorizes the Internal Revenue Service (IRS) to pay $1,400 to individuals and an additional $1,400 for each dependent of the taxpayer up to specified income limits with phase outs.
- Federal Unemployment Supplement: The Act extended the federal supplement to unemployment of $300/week through September 6th, 2021.
- Child Tax Credit: The child tax credit was temporarily increased to $3,000 per child and $3,600 for children under age 6.