What is the American Rescue Plan – Overview
The American Rescue Plan Act 2021 is a rescue package meant to ease recovery from the devastating effects of the COVID-19 pandemic.
The $1.9 trillion package is one of the most expensive economic rescue acts passed in the history of the US government.
The American Rescue Plan (ARP) has direct stimulus payments of $1,400. It also includes extending unemployment compensation and foreclosure moratoriums.
The ARP also eases continuing evictions and rising Child Tax Credit by making it completely refundable.
The ARP also provides monetary assistance to local and state administrations.
This financial aid is directed towards compensating for lost tax revenues, facilitating the safe opening of schools, and subsidizing COVID-19 testing and vaccination initiatives.
8 Benefits under the American Rescue Plan of 2021
The ARP stimulus package of 2021 is the biggest economic and health rescue program ever launched in US history.
This act was launched to complement the CARES Act 2020 (worth $2 trillion) and the Consolidated Appropriations Act 2021 (worth $900 billion).
The ARP extends several aspects of these two programs and creates new recovery strategies.
Let’s take a look at the specific benefits outlined under the American Rescue Plan 2021:
1 – Direct payments
The ARP program offers $1,400 as direct stimulus payments. This is meant for people who earn up to $75,000 a year. This is an addition to the $600 payment plan included in the second stimulus package.
This benefit is for those whose annual adjustable gross income (AGI) is $75,000 or less.
Couples with a combined AGI of less than $150,000 annually are also eligible to receive the full amount. The act also includes all dependents of benefitting individuals.
If your annual income grows over $75,000, you will continue to receive this stimulus package until it reaches $80,000 per year (or $160,000 for couples).
Under this direct financial aid program, eligible individuals can receive $300 weekly.
2 – Unemployment benefits
The Pandemic Unemployment Assistant (PAU) program is extended by the ARP 2021. As of September 2021, the duration of aid is extended from the previous 50 weeks to 79 weeks.
The $300 benefits under the Federal Pandemic Unemployment Compensation (FPUC) have also been extended after September 2021.
Additionally, the initial $10,200 in 2020 benefits are tax-free for families earning less than $150,000 annually.
The Act also facilitates the continuation of 100% subsidy for COBRA health insurance holders.
3 – Moratoriums and financial assistance
The American Rescue Plan does not directly extend foreclosure and eviction moratoriums; however, it provides funding that could assist those facing foreclosure or eviction, and other federal actions outside the ARP may influence moratorium extensions.
However, the ARP will provide additional funding to those lagging on mortgage payments, rent, and utility bills.
Under this legislation, some of the major provisions include:
- $21.55 billion towards emergency rental assistance (up to 30th September 2022)
- $5 billion in emergency housing vouchers (up to 30th September 2022)
- $100 billion towards tribal housing improvements
- $100 billion towards rural housing development (up to 30th September 2022)
- $5 billion towards assisting the homeless
4 – Food aid
The ARP legislation continues the 15% rise in the Supplemental Nutrition Assistance Program (SNAP) even after September 2021.
It offers $1.15 billion to state administrations under the SNAP initiative.
In addition, it offers $1 billion for nutrition assistance programs in the United States and commits $490 million to the USDA.
This fund is meant to increase the volume of cash vouchers under the WIC program.
Besides this, the ARP also allocates $390 million to enhance WIC participation until 30th September 2024.
The ARP reimburses emergency shelters through the National School Lunch Program for meals offered to people under 25 years old.
5 – Child Tax Credit
The American Rescue Plan increased the Child Tax Credit from $2,000 to $4,300 in 2021 per child for children ages 6 to 17 and $3,600 per child for children under 6.
Couples who make less than $150,000 annually and single parents who make less than $112,500 yearly will also receive these benefits.
This payment is deposited directly every month in the beneficiary’s designated bank account.
A family with a single child under 6 years will receive $300 monthly. Alternatively, families with children between 6 and 17 years will receive $250 monthly per child.
The new legislation also offers one year of credit payments. This is aimed at helping families pay ongoing costs without going into debt.
6 – Student loan forgiveness taxes
The American Rescue Plan includes a provision that makes any student loan forgiveness issued tax-free between December 30, 2020, and January 1, 2026. This does not forgive student loans but prepares for potential future forgiveness to be exempt from taxes. Usually, loan forgiveness comes under taxable income.
7 – Business aid
The ARP includes the Restaurant Revitalization Fund. This new program allocates $28.6 billion for restaurants and bars under the pandemic assistance grants.
Companies can get up to $10 million with a $5 million limit for physical locations. This amount can be used to cover the cost of utilities, payrolls, rent and other expenses.
The American Rescue Plan augmented the Paycheck Protection Program by adding $7.25 billion in funding to extend support for small businesses through forgivable loans.
The ARP also includes larger numbers of non-profit organizations that are allowed loan forgiveness.
8 – Pandemic response
The ARP 2021 allocates $50 billion towards COVID-19 contact tracing and testing. An additional $7.66 billion is meant to extend the size of the current public healthcare workforce.
Besides this, around $16 billion has been set aside to fund supply chains in vaccine distribution.
Additionally, the ARP 2021 provides $47.8 billion to expand federal, state, and local testing and enhance tracing abilities by setting up mobile testing units.
Another $14 billion is aimed to speed up the distribution and administration of COVID-19 vaccines across the United States.
Conclusion
The American Rescue Plan has provided extensive aid and benefits to individuals, organizations, corporations, and schools.
The increased funding will enable improved and faster rehabilitation for those affected economically by the COVID-19 pandemic in the US.
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