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Congress has passed the American Rescue Plan Act of 2021, and President Biden is expected to sign the bill this week. Below are a few highlights of the bill.
Unemployment
The first $10,200 in 2020 unemployment benefits is tax-free for taxpayers with less than $150k of AGI.
Recovery Rebates
$1,400 for each individual, including dependents. The stimulus payments will begin phasing out at $150k for married filing joint taxpayers and at $75k for single taxpayers. The stimulus payments will be completely phased out when AGI exceeds $160k and $80k, respectively.
Child Tax Credit
The new child tax credit is $3,000 per child and $3,600 for those under age 6. The act makes 17-year-olds eligible as qualifying children.
Employee Retention Credit
The employee retention credit extends through the end of 2021.
Family and Sick Leave Credits
The credits established by the Families First Coronavirus Response Act are extended to September 30, 2021.
- The limit on the credit for paid family leave is $12,000
- The paid leave credit will be allowed for leave that is due to a COVID-19 vaccination
- The limit on the number of days taken into account for paid sick leave will reset after March 31, 2021