On March 11, another round of COVID-19 relief legislation was signed into law. The American Rescue Plan Act (ARPA) includes funding for individuals, businesses, and state and local governments, but also some significant tax-related provisions.
ARPA extends and expands some tax provisions in the CARES Act and the Consolidated Appropriations Act (CAA) and also includes some new tax-related provisions.
A quick look
Here’s a quick look at some of the tax provisions that may affect you:
Individuals
- Recovery rebates of up to $1,400 for singles and heads of households and $2,800 for married couples filing jointly — plus $1,400 per qualifying dependent (including adult dependents) — subject to adjusted gross income (AGI) phaseouts starting at $75,000 for singles, $112,500 for heads of households and $150,000 for joint filers and ending at $80,000, $120,000 and $160,000, respectively
- Increased Child credit, including advance payments of part of the credit later this year
- Expanded child and dependent care tax credit
- Tax-free treatment of forgiven student loan debt
- Exclusion from gross income of the first $10,200 in unemployment benefits received
Businesses and other employers
- Extended and expanded tax credits for retaining employees, through Dec. 31, 2021
- Extended and modified payroll tax credits for paid sick and family leave, through Sept. 30, 2021
- Extended excess business loss limitation, through Dec. 31, 2026
- Expansion of the Section 162(m) limits on the tax deduction public companies can take for executive compensation to cover the CEO, the CFO and the five next highest paid employees, beginning in 2027
How will you benefit?
This is just a brief overview of the tax-related provisions of ARPA. Additional rules and limits apply. Contact your tax advisor for more details on these provisions and how you might benefit.