U.S. tax developments: The American Rescue Plan and 2020 filing deadline extension

The American Rescue Plan Act

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On March 11th, President Biden signed the American Rescue Plan Act (ARPA) of 2021, representing a $1.9 trillion tax and spending package targeted towards economic recovery and health impacts of the coronavirus pandemic. The new law, supported and fast-tracked by Congressional Democrats and the White House, contains a wide array of provisions. Among those relevant to individuals, ARPA provides another round of direct stimulus payments to eligible taxpayers, temporarily increases several low and middle income tax credits, includes significant state and local assistance, funds vaccine production and distribution, and extends the federal supplement to state unemployment benefits through September 6, 2021.

What's included in the package

The third round of stimulus (‘economic impact’) payments provides up to $1,400 for adults and any dependents. The payments begin to phase out at $75,000 for single filers and $150,000 for joint filers and are completely phased-out at $80,000 (single) and $160,000 (joint). Approximately 89% of filers will receive some payment, according to analysis from Tax Foundation. These phase-out thresholds are lower than the stimulus payments sent out in 2020, meaning there is a subset of individuals that received previous payments, but will no longer be eligible. Conversely, the 2020 payments were only provided to children under the age of 17, but the ARPA payments are eligible for all dependent children (e.g. older high school and college age students), and dependent relatives (e.g. elderly parents).

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Michelle Curran

Americas Marketing Manager, AIRINC

Marketing manager posting global mobility content authored by experienced industry experts at AIRINC.