Additional Stimulus Bill – Business and Individual Incentives

March 10, 2021 - The House of Representatives has passed another stimulus bill (the American Rescue Plan Act of 2021) which was recently passed by the Senate. The bill now goes to the President who is expected to sign the legislation.

The bill contains a number of individual and business incentives. A summary of some of the key provisions is as follows:

2021 Individual Recovery Rebate

One of the key features of the new legislation is the 2021 Individual Recovery Rebate. The rebate amount is $1,400 ($2,800 for eligible individuals filing joint returns) plus $1,400 for each dependent of the taxpayer. Individuals eligible to receive the rebate include individuals other than nonresident aliens, dependents, and estates and trusts—but the eligible benefit is reduced for taxpayers with adjusted gross income over $75,000 ($150,000 for joint filers and surviving spouses). The initial rebate amount is determined based on the 2019 tax return unless a 2020 tax return has already been filed.

Expanded Child Tax Credit for 2021

For 2021, the child tax credit is expanded to include 17-year-old children as qualifying children and increases the credit to $3,000 per child ($3,600 for children under 6). The increased credit amounts are reduced for taxpayers with adjusted gross income over $75,000 ($150,000 for joint filers and surviving spouses).

Restaurant Revitalization Grants

The bill establishes a Restaurant Revitalization Fund to provide eligible restaurants, food trucks, taprooms, and similar businesses grants. The grant amounts will be limited to the pandemic related revenue loss (the 2019 gross receipts less the 2020 gross receipts) limited to $10 million and $5 million per physical location of the eligible entity. The bill further reduces the eligible grant by any PPP loans received in 2020 or 2021. The grants will not be taxed and the expenses paid with the grant money will be fully deductible. The grant money can be used on payroll costs, mortgage payments, rent, utilities, maintenance, and other operational expenses and supplies.

Extension of Employee Retention Credit

The bill extends the Employee Retention Credit set to expire on July 1^st through December 31, 2021. The credit will be capped at $50,000 per calendar quarter for certain startup businesses with additional incentives for severely financially distressed employers.

The bill contains a number of other provisions that can be beneficial to individuals and businesses including expanded EIDL grants, expanded PPP loans for non-profits, COBRA subsidies, etc. We will provide additional information and guidance as more information becomes available.