The American Rescue Plan Act of 2021 (ARPA;
H.R. 1319) Title IX Subtitle G—Tax Provisions
Related to Promoting Economic Security
Updated March 1, 2021
Congressional Research Service
https://crsreports.congress.gov
R46680

Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

he 117th Congress is considering Coronavirus Disease 2019 (COVID-19)-related relief and
economic stimulus legislation. On February 8, 2021, House Ways and Means Committee
T Chairman Richard E. Neal released nine legislative proposals to be considered under the
budget reconciliation instructions.1 On February 27, 2021, the House passed these proposals as
part of the American Rescue Plan Act of 2021 (ARPA; H.R. 1319). This report summarizes the
tax provisions in Title IX Subtitle G of H.R. 1319.
The current proposed COVID-19 tax relief (Title IX Subtitle G of H.R. 1319) would
 provide a one-time direct payment of $1,400 per person to eligible households;
 temporarily expand the child tax credit for low- and moderate-income families,
with a portion of the credit issued in 2021 before income taxes are filed;
 temporarily expand the earned income tax credit (EITC) for workers without
qualifying children;
 temporarily expand the child and dependent care credit for most taxpayers and
temporarily expand the exclusion for child and dependent care expenses;
 modify and extend the payroll tax credits for employer-provided paid sick and
paid family leave;
 further extend the employee retention tax credit;
 temporarily enhance benefits and/or expand eligibility for the health insurance
premium tax credit (PTC);
 repeal a provision that al ows worldwide al ocation of interest for the foreign tax
credit limit, decreasing foreign tax credits in some cases;
 provide that advances against Economic Injury Disaster Loans that are not repaid
and grants under the Restaurant Revitalization Fund wil be excluded from
income and deductions for associated expenses wil be al owed; and
 modify reporting thresholds for third-party settlement organizations.
Current consideration of COVID-19-related tax relief follows the enactment of other laws
addressing the COVID-19 crisis: (1) the Coronavirus Preparedness and Response Supplemental
Appropriations Act, 2020 (P.L. 116-123); (2) the Families First Coronavirus Response Act
(FFCRA; P.L. 116-127); (3) the Coronavirus Aid, Relief, and Economic Security (CARES) Act
(P.L. 116-136);2 (4) the Paycheck Protection Program and Health Care Enhancement Act (P.L.
116-139); and (5) the Consolidated Appropriations Act, 2021 (P.L. 116-260).3
Other pandemic-related tax policy proposals were considered in the 116th Congress, but not
enacted. In the House, tax relief was also considered in the Heroes Act (H.R. 8406, adopted as
H.R. 925; H.R. 6800).4 Legislation introduced in the Senate (the American Workers, Families,

1 For information on budget reconciliation, see CRS Report R44058, The Budget Reconciliation Process: Stages of
Consideration, by Megan S. Lynch and James V. Saturno . For information on the budget resolution for 2021, which
contains reconciliation directives, see CRS Report R46675, S.Con.Res. 5: The Budget Resolution for FY2021 , by
Megan S. Lynch and James V. Saturno.
2 For more on tax provisions in the CARES Act, see CRS Report R46279, The Coronavirus Aid, Relief, and Economic
Security (CARES) Act—Tax Relief for Individuals and Businesses, coordinated by Molly F. Sherlock.
3 For more information on the tax provisions in this legislation, see CRS Report R46649, The COVID-Related Tax
Relief Act of 2020 and Other COVID-Related Tax Provisions in P.L. 116-260, by Molly F. Sherlock et al.
4 For more information on tax provisions in the Heroes Act, see CRS Report R46358, Heroes Act: Revenue Provisions,
coordinated by Molly F. Sherlock.
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link to page 5 link to page 15 Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

and Employers Assistance Act [S. 4318]; the Supporting America’s Restaurant Workers Act [S.
4319]; and the Restoring Critical Supply Chains and Intel ectual Property Act [S. 4324]) would
have provided tax relief intended to al eviate the economic effects of the COVID-19 pandemic.5
Table 1 of this report summarizes the tax provisions in Title IX Subtitle G of the American
Rescue Plan Act (ARPA; H.R. 1319) and provides links to CRS resources containing additional
information. Joint Committee on Taxation (JCT) revenue estimates for these provisions are
included in Table 2.
Additional Resources
 Joint Committee on Taxation, Estimated Revenue Effects Of H.R. 1319, The
“American Rescue Plan Act Of 2021,” Scheduled For Consideration By The
House Of Representatives On February 26, 2021, JCX-12-21, February 26, 2021,
at https://www.jct.gov/publications/2021/jcx-12-21/.6
 U.S. Congress, House Committee on the Budget, American Rescue Plan Act of
2021, Report of the Committee on the Budget House of Representatives to
Accompany H.R. 1319, 117th Cong., 1st sess., February 24, 2021, Report 117-7.
 Joint Committee on Taxation, Description Of The Budget Reconciliation
Legislative Recommendations Relating To Prompting Economic Security, JCX-3-
21, February 8, 2021, at https://www.jct.gov/publications/2021/jcx-3-21/.

5 For more information on the Senate proposals, see CRS Report R46470, The American Workers, Families, and
Em ployers Assistance Act (S. 4318): Title II—Revenue Provisions and Other “HEALS Act” Tax Provisions,
coordinated by Molly F. Sherlock.
6 Earlier estimates were prepared in advance of consideration by the House Committee on Ways and Means. See Joint
Committee on T axation, Estim ated Budgetary Effects Of The Revenue Provisions Of The Chairm an’s Am endm ent In
The Nature Of A Substitute To The Budget Reconciliation Legislative Recom m endations, Scheduled For Markup By
The House Com m ittee On Ways And Means On February 10, 2021 , JCX-9-21, February 9, 2021, at
https://www.jct.gov/publications/2021/jcx-9-21/.
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Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Table 1. American Rescue Plan Act of 2021 (ARPA; H.R. 1319); Title IX Subtitle G—
Tax Provisions Related to “Promoting Economic Security”
Section Title
Description
CRS Resources
Subtitle G—Promoting Economic Security
Part 1—2021 Recovery Rebates to Individuals
Recovery Rebates to
Would enact a third round of direct payments
For more information, see
Individuals
for individuals and households (“stimulus

CRS Insight IN11604, COVID-
checks”). These payments would be structured as
19 and Direct Payments:
refundable tax credits against 2021 income taxes,
Frequently Asked Questions
but would be issued (and hence received) in
(FAQs) About the Proposed Third
2021, as opposed to 2022 (when 2021 income
Round of “Stimulus Checks” in
tax returns wil be filed). Amount and eligibility
the American Rescue Plan Act of
for the advanced credit would general y be based
2021 (ARPA; H.R. 1319), by
on information from 2020 income tax returns (or
Margot L. Crandal -Hol ick.
2019 returns, if 2020 returns have not been filed
when the advanced credit is initial y issued). For

CRS Insight IN11605, COVID-
households whose payment was based on 2019
19 and Direct Payments:
income data, and who would be eligible to
Comparison of First and Second
receive a larger payment based on 2020 data, the
Round of “Stimulus Checks” to a
IRS would be directed to issue a supplementary
Proposed Third Round in the
payment (a “top up”) within 90 days of the tax
American Rescue Plan Act of
filing deadline or September 1, 2021, whichever
2021 (ARPA; H.R. 1319), by
date is earlier.
Margot L. Crandal -Hol ick.
Payments would general y be issued per
For background, see
household and equal the sum of $1,400 per

CRS Report R46415, CARES
eligible individual ($2,800 for married joint filers)
Act (P.L. 116-136) Direct
and $1,400 for each eligible dependent (including
Payments: Resources and
older children and adult dependents). For each
Experts, coordinated by Margot
individual who died before January 1, 2021, the
L. Crandal -Hol ick.
payment amount would be reduced from $1,400

CRS Insight IN11576, COVID-
to $0.
19 and Direct Payments to
The payment would phase out ratably (i.e.,
Individuals: Comparison of the
proportional y) between $75,000 and $100,000
Second Round of “Stimulus
for single filers, $112,500 and $150,000 for head
Checks” in P.L. 116-260 to the
of household filers, and $150,000 and $200,000
First Round in the CARES Act
for married joint filers. The larger the total credit
(P.L. 116-136), by Margot L.
amount, the faster the payment would phase out
Crandal -Hol ick.
using this method.

CRS Insight IN11575, COVID-
Eligible individuals and dependents would
19 and Direct Payments to
general y need to have a social security number
Individuals: Frequently Asked
(SSN) to receive the payment. (Adoption
Questions (FAQs) About the
taxpayer ID numbers would also be valid for
Second Round of “Stimulus
dependents.) The maximum payment amount
Checks” in P.L. 116-260, by
($1,400) would be reduced to $0 for each
Margot L. Crandal -Hol ick.
otherwise eligible individual or qualifying

dependent who does not have an SSN (i.e., they

CRS Insight IN11580, COVID-
have an individual taxpayer identification number,
19 and Direct Payments:
or ITIN, instead). This provision would not apply
Summary of the CASH Act (H.R.
to married members of the Armed Forces if at
9051, 116th Congress)
least one spouse had an SSN. In such cases, they
Modifications to “Stimulus
would be eligible for up to $2,800. If no eligible
Checks”, by Margot L. Crandal -
individual had an SSN (i.e., an unmarried taxpayer
Hol ick.
does not have an SSN or neither spouse of a
married joint filing couple has an SSN), they
would stil receive a payment for a qualifying
dependent with an SSN.
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Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
The advanced payment of the credit would
general y be exempt from offset by Treasury
prior to when the payment is issued for certain
past-due debts owed by the recipient (including
past-due child support). However, the amount
the taxpayer would claim as a credit on their
2021 tax returns would general y be subject to
offset.
For eligible individuals who did not file a 2020 or
2019 income tax return, the IRS would be given
broad authority to make payments based on
information available to the Treasury, in a similar
manner as was done with the second round of
payments enacted under P.L. 116-260.
Treasury would be directed to make payments to
the U.S. territories (mirror code and non-mirror
code) equal to the aggregate amount issued to
their residents as a result of this provision. (Many
territorial residents wil receive this benefit under
a version of the provision administered via the
territorial government, rather than the IRS.)
These payments would not be taxable. In
addition, like other tax credits, these payments
would not count as income or resources for a
12-month period in determining eligibility for, or
the amount of assistance provided by, any
federal y funded public benefit program.
If a taxpayer received a larger advanced credit in
2021 than they were eligible for on their 2021
income tax return, they general y would not be
required to pay it back. If an individual received
an advanced payment less than what they were
eligible for on their 2021 income tax return, they
could claim the difference on that return (filed in
2021).
Part 2—Child Tax Credit
Child Tax Credit
For 2021, would temporarily increase the
For more information, see
Improvements for
amount of the child tax credit for low- and
CRS Insight IN11613, The Child
2021
moderate-income taxpayers to up to $3,600 per
Tax Credit: Proposed Expansion
child for a young child and up to $3,000 for older
in the American Rescue Plan Act
children by modifying several provisions of the
of 2021 (ARPA; H.R. 1319), by
existing credit. First, the bil would eliminate the
Margot L. Crandal -Hol ick.
earned-income-based phase-in of the refundable
portion of the child credit (often referred to as
For background, see
the “additional child credit” or ACTC) and

CRS Report R41873, The Child
eliminate the maximum amount of the ACTC
Tax Credit: How It Works and
($1,400). Hence, the child credit would be “ful y
Who Receives It, by Margot L.
refundable” and available to otherwise eligible
Crandal -Hol ick.
taxpayers with no earned income. Second, the

CRS Report R46502, The Child
bil would increase the maximum age for an
Tax Credit: Selected Legislative
eligible child to 17. Third, the bil would increase
Proposals in the 116th Congress,
the maximum amount of the credit from $2,000
by Margot L. Crandal -Hol ick.
per child to $3,600 per child for a young child (0-
5 years old) and $3,000 per child for an older
child (6-17 years old). This increase in the
maximum child credit of $1,600 per child for
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Section Title
Description
CRS Resources
young children and $1,000 per child for older
children would gradual y phase out at a rate of
5% as income exceeded specified thresholds until
the credit amount equaled the current-law
maximum of $2,000 per child. These thresholds
would be $75,000 for single filers, $112,500 for
head of household filers, and $150,000 for
married joint filers. (The actual income level at
which the credit phased down to $2,000 per
child would depend on the number and age of
qualifying children.) For most families, the credit
would then remain at its current-law level and
phase out when income exceeded the current-
law thresholds of $200,000 ($400,000 for
married joint filers).a
Would direct the Treasury to issue half of the
expected 2021 credit in periodic payments
beginning July 1, 2021. These periodic payments
would general y be of equal size. The remaining
half of the total 2021 credit would be claimed on
a 2021 income tax return filed in early 2022. The
amount of the payments advanced in 2021 would
be estimated based on 2020 income tax data, or
if unavailable, 2019 income tax data. The
advanced child credit payments would reduce the
child credit received with a 2021 return. In cases
where a taxpayer receives more in advanced
payments than they are eligible for (whether due
to changes in income, changes in filing status, or
changes in the number of eligible children who
live with the taxpayer between 2021 and the year
that provides data on which the advanced credit
is based [2020 or 2019]), taxpayers would
general y need to repay total aggregate advanced
payments. In cases where a taxpayer received
excess advanced payments due to net changes in
the number of qualifying children between 2020
(or 2019) and 2021, repayment obligations would
be reduced for low- and moderate-income
taxpayers. Specifical y, taxpayers with income
below $40,000 for single filers, $50,000 for head
of household filers, and $60,000 for joint filers in
2021 would not need to repay up to $2,000 per
qualifying child in advanced credit overpayments
(the $2,000 amount is referred to as the “safe
harbor amount”). Taxpayers with income above
these thresholds but below $80,000 for single
filers, $100,000 for head of household filers, and
$120,000 for married joint filers would gradual y
have the safe harbor amount reduced to $0 per
qualifying child. Hence, taxpayers with income
over $80,000 for single filers, $100,000 for head
of household filers, and $120,000 for married
joint filers in 2021 would need to repay the
entire amount of the overpayment.
The bil would create an online portal to al ow
taxpayers the options to opt out of receiving
advanced payments and to provide information
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Section Title
Description
CRS Resources
regarding changes in income, marital status, and
number of qualifying children in order to modify
the advanced credit amounts.
Advanced payments would not be subject to
offset prior to when the payment is issued for
certain past-due debts owed by the recipient.
However, the amount the taxpayer claims as a
credit on their 2021 tax returns would general y
be subject to offset.
Advanced payments would general y not be
available to eligible residents of U.S. territories.
Application of the
Would effectively expand child credit eligibility to
For background, see
Child Tax Credit in
residents of U.S. territories permanently. For

CRS Report R44651, Tax Policy
Possessions
“mirror code” territories, the Treasury would
and U.S. Territories: Overview
make payments equal to the territory’s costs of
and Issues for Congress, by Sean
the child tax credit. For American Samoa (a non-
Lowry.
mirror code territory), the Treasury would make
payments equal to the territory’s costs of the
child tax credit as if it were a mirror code
territory. In contrast, eligible residents of Puerto
Rico (also a non-mirror code territory) would file
for the credit directly with the IRS.
Part 3—Earned Income Tax Credit
Strengthening the
For 2021, would temporarily expand both
For more information, see
Earned Income Tax
eligibility for and the amount of the earned

CRS Insight IN11610, The
Credit for Individuals
income tax credit (EITC) for taxpayers without
“Childless” EITC: Summary of
with no Qualifying
qualifying children by modifying the eligibility age
Current Law and Proposed
Children
and credit formula.
Expansion in the American
Regarding eligibility age, would expand eligibility
Rescue Plan Act of 2021 (ARPA;
for the EITC for individuals with no qualifying
H.R. 1319), by Margot L.
children—sometimes referred to as the “childless
Crandal -Hol ick.
EITC”—by reducing the minimum eligibility age
For background, see
from 25 to 19 for most workers. In other words,
this change would al ow most eligible workers

CRS Report R43805, The
ages 19 to 24 to claim the childless EITC. For
Earned Income Tax Credit
students who are attending school at least part-
(EITC): How It Works and Who
time, the age limit would be temporarily reduced
Receives It, by Margot L.
from 25 to 24.b For former foster children and
Crandal -Hol ick, Gene Falk,
youth who are homeless, the minimum age would
and Conor F. Boyle.
temporarily be reduced from 25 to 18. The bil
would also temporarily eliminate the upper age
limit, so workers aged 65 and older would be
eligible.
Regarding the credit amount, would temporarily
increase the childless EITC by increasing the
earned income amount (the minimum income
necessary to receive the maximum credit
amount) and phaseout threshold amount (the
maximum income level at which taxpayers
receive the maximum credit amount before it
begins to phase out) to $9,820 and $11,610,
respectively, while also doubling the phase-in and
phaseout rates from 7.65% to 15.3%. The
maximum childless EITC would increase from
$543 to $1,502 in 2021.
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Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
Taxpayer Eligible for
Would permanently al ow taxpayers who

Childless Earned
currently cannot claim the childless EITC because
Income Credit in Case al of their qualifying children do not have SSNs
of Qualifying Children
to be eligible to claim the childless EITC.
Who Fail to Meet
Certain Identification
Requirements
Credit Al owed in
Would permanently al ow married taxpayers

Case of Certain
who file their tax returns as married filing
Separated Spouses
separately to claim the EITC if they live with a
child for whom they can claim the EITC for more
than half the year and either (1) do not have the
same principal place of abode as their spouse for
the last six months of the year, or (2) have a
decree, instrument, or agreement (i.e., other
than a divorce decree) and do not live with their
spouse at the end of the year.
Modification of
Would permanently modify the disqualified

Disqualified
investment income test. Under current law,
Investment Income
taxpayers with investment income over a certain
Test
threshold—$3,650 in 2020 and 2021—are
ineligible for the EITC. Disqualified investment
income is defined as interest income (including
tax-exempt interest), dividends, net rent, net
capital gains, and net passive income. It also
includes royalties from sources other than the
filer’s ordinary business activities. This provision
would permanently raise this amount to $10,000
and annual y adjust it for inflation beginning in
2022.
Application of Earned
Would permanently provide authority to make

Income Tax Credit in
payments to Puerto Rico, American Samoa, and
Possession of the
mirror-code territories for amounts they pay out
United States
in the EITC. For Puerto Rico and American
Samoa, such payments would be contingent upon
increasing the amount of their EITC or enacting
an EITC, respectively.
Temporary Special
For the purposes of calculating their EITC on

Rule for Determining
their 2021 income tax return, would al ow
Earned Income for
taxpayers to substitute their 2019 earned income
Purposes of Earned
for their 2021 earned income if their earned
Income Tax Credit
income at the end of 2021 was less than their
2019 earned income.
Part 4—Dependent Care Assistance
Refundability and
For 2021, would temporarily expand the child
For background, see
Enhancement of Child
and dependent care credit by making the credit

CRS Report R44993, Child and
and Dependent Care
refundable and making it larger for most workers.
Dependent Care Tax Benefits:
Tax Credit
The CDCTC credit amount is a product of the
How They Work and Who
amount of qualifying expenses (which is subject
Receives Them, by Margot L.
to a cap) and the credit rate. The bil would
Crandal -Hol ick.
increase the cap on qualifying expenses from
$3,000 for one child and $6,000 for two or more
children to $8,000 and $16,000, respectively. The
bil would also increase the credit rate for
workers with $185,000 or less of income (the
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Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
credit rate would remain the same as under
current law for those with income over $185,000
up to $400,000 [i.e., 20%], and be reduced from
current law for those with over $400,000 of
income). Specifical y, for those with less than
$125,000 of income, the credit rate would
increase to 50% (from 35%) of expenses. This
50% credit rate would gradual y phase down to
20% until taxpayers had $185,000 of income. For
those with more than $185,000 of income up to
$400,000, the credit rate would then remain at
20%, gradual y fal ing to zero when income
exceeds $440,000. As a result, those with income
over $440,000 would not be eligible for the
credit.
By making the credit refundable, the bil would
effectively expand eligibility to lower-income
taxpayers. Under current law, the CDCTC is a
nonrefundable credit, meaning the value of the
credit cannot exceed a taxpayer’s income tax
liability. As a result, those with little or no
income tax liability, including many low-income
taxpayers, receive little or no benefit from the
current credit.
In combination, these changes would increase the
maximum amount of the CDCTC from $2,100 to
$8,000, based on expenses and income.
The bil would al ow the Treasury to make
payments to Puerto Rico, American Samoa, and
mirror-code territories for the cost of providing
the refundable CDCTC in 2021 to their
territorial residents. (Non-mirror code
territories [i.e., Puerto Rico and American
Samoa] would need to develop a plan, approved
by the Treasury Secretary, to distribute the
amounts of the refundable CDCTC to their
residents.)
Increase in Exclusion
For 2021, would temporarily increase the

for Employer-
maximum amount of qualifying child care
Provided Dependent
expenses that eligible taxpayers could exclude
Care Assistance
from their income from $5,000 to $10,500.
Part 5—Credits for Paid Sick and Family Leave
Payrol Credits
Would extend the Families First Coronavirus
For background, see
Response Act (FFCRA; P.L. 116-127) employer

CRS In Focus IF11739, Payrol
payrol tax credits for paid sick and paid family
Tax Credit for COVID-19 Sick
leave from March 31, 2021, through September
and Family Leave, by Mol y F.
30, 2021.
Sherlock.
FFCRA paid sick leave was limited to 10 days per
employee. This provision would reset the 10-day
limit, starting April 1, 2021, for employers
claiming the credit for paid sick leave provided to
their employees.
Would expand the paid sick and paid family leave
credits to al ow credits for leave taken to obtain
immunization related to COVID-19 or recover
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Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
from any injury, disability, il ness, or condition
related to COVID-19 immunization.
Would expand the definition of qualifying paid
family leave to al ow family leave payrol tax
credits to be claimed for al qualifying uses of paid
sick time, including for leave provided if the
employee is subject to a quarantine or isolation
order due to COVID-19 or is caring for
someone in a similar situation.
The tax credit for family leave wages is limited to
$200 per day, and $10,000 total per employee.
This provision would increase this limit on the
tax credit for paid family leave wages, al owing
the credit on up to $12,000 in paid family leave
wages.
Would add a nondiscrimination rule to the paid
leave payrol tax credits, providing employers
could not claim the credits if paid leave provided
to employees discriminates in favor of highly
compensated employees or ful -time employees,
or discriminates on the basis of employment
tenure with the employer.
The paid sick and paid family leave tax credits are
currently claimed against the Old-Age, Survivors
and Disability Insurance (OASDI) tax, or the
equivalent amount of the Railroad Retirement
Tax Act (RRTA) tax. This provision would
restructure the paid sick and family leave payrol
tax credits to be claimed against the employer’s
share of the hospital insurance (HI) payrol tax,
after March 31, 2021. The employer’s share is
1.45% of wages paid to employees. This credit
would not affect amounts transferred to the
Federal Hospital Insurance Trust Fund.
Government employers, including state and local
government employers, are not al owed to claim
paid leave payrol tax credits. This provision
would provide that 501(c)(1) organizations and
501(a) organizations could claim the tax credits,
making certain state and local governments, as
wel as 501(c)(1) federal government
instrumentalities, tax-credit eligible.
Provision provides that paid sick and paid family
leave payrol tax credits can be increased by the
employer’s share of OASDI and HI payrol taxes
(and equivalent RRTA tax) for the paid leave
wages. Denial of double benefit applies, and gross
income of the employer is increased by the
amount of the credit provided by this section.
Credit for Sick Leave
Under FFCRA, self-employed individuals are
For background, see
for Certain Self-
al owed a refundable income tax credit for paid

CRS In Focus IF11739, Payrol
Employed Individuals
sick leave. This provision would extend and
Tax Credit for COVID-19 Sick
expand the paid sick leave tax credits for self-
and Family Leave, by Mol y F.
employed individuals, similar to the modifications
Sherlock.
made for employers (described above).
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Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
Credit for Family
Under FFCRA, self-employed individuals are
For background, see
Leave for Certain Self-
al owed a refundable income tax credit for paid

CRS In Focus IF11739, Payrol
Employed Individuals
family leave. This provision would extend and
Tax Credit for COVID-19 Sick
expand the paid family leave tax credits for self-
and Family Leave, by Mol y F.
employed individuals, similar to the modifications
Sherlock.
made for employers (described above). Tax
credits could be claimed for up to 60 days of
family leave for self-employed individuals.
Part 6—Employee Retention Credit
Extension of
Through June 30, 2021, the employee retention
For background, see
Employee Retention
and rehiring tax credit is 70% of qualified wages.

CRS In Focus IF11721, The
Credit
The refundable payrol credit can be computed
Employee Retention and
on up to $10,000 in qualified wages paid to an
Employee Retention and Rehiring
eligible employee per calendar quarter. Thus, the
Tax Credits, by Mol y F.
maximum credit amount for 2021 is $14,000
Sherlock.
(70% of up to $20,000 in qualified wages paid
over the first two quarters).
This provision would extend the employee
retention credit through December 31, 2021.
The credit would be restructured to be claimed
against the employer’s share of the hospital
insurance (HI) payrol tax (as opposed to the
OSADI and equivalent amount of RRTA tax).
Part 7—Premium Tax Credit
Improving
For 2021 and 2022, would temporarily expand
For background, see
Affordability by
eligibility for and the amount of the premium tax

CRS Report R44425, Health
Expanding Premium
credit (PTC) by modifying the income eligibility
Insurance Premium Tax Credits
Assistance for
criteria and credit formula.
and Cost-Sharing Subsidies, by
Consumers
Regarding income, would temporarily expand
Bernadette Fernandez.
eligibility by eliminating the current-law phaseout
for households with annual incomes above 400%
of the federal poverty level (FPL).
Regarding the formula, would temporarily
increase the credit amount by reducing the
percentage of annual income that eligible
households would be required to contribute
toward the premium. The temporary percentages
would range from 0.0% to 8.5% of household
income, with higher-income groups subject to
the larger percentages, as specified.
Temporary
For 2020, would temporarily provide tax relief to

Modification of
individuals who would be subject to the current-
Limitations on
law requirement to pay back PTC amounts that
Reconciliation of Tax
were provided in excess. Would temporarily
Credits for Coverage
suspend the recapture of excess credit amounts
Under a Qualified
under the current tax reconciliation process.
Health Plan with
Advance Payments of
Such Credit
Congressional Research Service

10

Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
Application of
For 2021, would temporarily expand eligibility for
For background, see
Premium Tax Credit
and the amount of the PTC for certain individuals

CRS Report R45478,
in Case of Individuals
who receive unemployment compensation (UC).
Unemployment Insurance:
Receiving
Would temporarily deem individuals who receive
Legislative Issues in the 116th
Unemployment
UC for any week in calendar year 2021 to have
Congress, by Julie M. Whittaker
Compensation During
met the PTC income eligibility criteria. Would
and Katelin P. Isaacs.
2021
temporarily disregard any household income
above 133% FPL.
Part 8—Miscellaneous Provisions
Repeal of Election to
U.S. firms are eligible for foreign tax credits up to
For background, see
Al ocation Interest,
the amount of U.S. tax paid on foreign-source

CRS Report RL34494, The
Etc. on Worldwide
income. To impose this limit, U.S. and foreign-
Foreign Tax Credit’s Interest
Basis
source income must be determined. Certain
Al ocation Rules, by Jane G.
deductions are al ocated between U.S. and
Gravel e and Donald J.
foreign sources, including interest. Until 2021,
Marples.
firms al ocated interest excluding that paid by
foreign firms (cal ed “waters edge” al ocation).
Under current law, beginning in 2021, firms can
elect to include interest paid by related foreign
firms. This treatment is cal ed worldwide
al ocation. It is beneficial for some firms because
some of the interest paid for foreign firms is
al ocated to U.S. sources, increasing foreign-
source income, increasing the limit on the foreign
tax credit and, thus, increasing foreign tax credits
that reduce tax liability. A provision was adopted
in 2004 to move to worldwide al ocation, but it
has been delayed by other legislation and is
scheduled to begin in 2021. This provision would
repeal the election to move to worldwide
al ocation.
Tax Treatment of
Under normal tax rules, a forgiven debt is
For background, see
Targeted Economic
general y treated as taxable income to the

CRS Insight IN11378, IRS
Injury Disaster Loan
borrower. Prior legislation has al owed forgiven
Guidance Says No Deduction Is
Advances
loans for certain programs (such as those
Al owed for Business Expenses
provided by the Paycheck Protection Program, or
Paid with Forgiven PPP Loans, by
PPP, and certain other smal business loans) to be
Sean Lowry and Jane G.
excluded from income. Fol owing an IRS ruling
Gravel e.
that associated expenses would not be
deductible, legislation specified that associated

CRS Report R46284, COVID-19
expenses would be deductible. This provision
Relief Assistance to Smal
would extend this treatment (exclusion from
Businesses: Issues and Policy
income and deduction of expenses) to additional
Options, by Robert Jay Dilger,
Economic Injury Disaster Loan (EIDL) advances
Bruce R. Lindsay, and Sean
on loans that are not required to be repaid.
Lowry.

CRS Insight IN11370, SBA EIDL
and Emergency EIDL Grants for
COVID-19, by Bruce R. Lindsay.
Tax Treatment of
Under normal tax rules, a forgiven debt is treated For background, see
Restaurant
as taxable income to the borrower. Prior

CRS Insight IN11378, IRS
Revitalization Grants
legislation has al owed forgiven loans for certain
Guidance Says No Deduction Is
programs (such as those provided by the
Al owed for Business Expenses
Paycheck Protection Program, or PPP, and
Paid with Forgiven PPP Loans, by
certain other smal business loans) to be
Sean Lowry and Jane G.
excluded from income. Fol owing an IRS ruling
Gravel e.
that associated expenses would not be
Congressional Research Service

11

Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Section Title
Description
CRS Resources
deductible, legislation specified that associated

CRS Report R46284, COVID-19
expenses would be deductible. This provision
Relief Assistance to Smal
would extend this treatment (exclusion from
Businesses: Issues and Policy
income and deduction of expenses) to additional
Options, by Robert Jay Dilger,
grants made from the new Restaurant
Bruce R. Lindsay, and Sean
Revitalization Fund.
Lowry.
Modification of
Credit card companies and electronic payment

Exceptions for
processors are required to annual y file aggregate
Reporting of Third
transaction reports with the IRS listing total
Party Network
annual payments to merchants (Internal Revenue
Transactions
Code §6050W). A de minimus reporting
exception provides that third-party settlement
organizations are only required to report
transactions of payees who receive more than
$20,000 and conduct more than 200 transactions
per year. This provision would modify the
threshold for reporting, setting it at $600 per
year.
Source: H.R. 1319 Title IX Subtitle G, as passed the House on February 27, 2021.
a. For example, if a married couple had three children under 6 years old, the maximum credit they would be
eligible for would be $10,800 ($3,600 x 3) if they had income under $150,000. For taxpayers with income
over $150,000, the additional $4,800 of the credit ($1,600 x 3) would be reduced at a rate of 5%. At
$246,000 of income, the credit would be $6,000 ($2,000 x 3), the current-law amount. The credit would
remain at this amount until the taxpayer’s income reached the current-law thresholds of $400,000. At that
point, the credit would phase out under the provisions of current law (5% phaseout rate).
b. The legislation includes as part of the definition of a student someone carrying half or more of the normal
ful -time workload for their program of study, as defined under Internal Revenue Code (IRC) §25A(b)(3).

Congressional Research Service

12

Table 2. Estimated Cost of Title IX Subtitle G of the American Rescue Plan Act of 2021 (ARPA; H.R. 1319)
Fiscal Years; Mil ions of Dol ars
Provision
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2021-2031
Part 1—2021 Recovery Rebates to Individuals
Recovery Rebates to Individuals
404,937
17,400
-
-
-
-
-
-
-
-
-
422,337
Part 2—Child Tax Credit
Child Tax Credit: Improvements for
25,826
79,249
710
721
725
721
307
311
316
320
323
109,529
2021 and Application of the Child
Tax Credit in Possessions
Part 3—Earned Income Tax Credit
Strengthening the Earned Income
521
11,361
-
-
-
-
-
-
-
-
-
11,882
Tax Credit for Individuals with no
Qualifying Children
Taxpayer Eligible for Childless
(i)
12
2
1
1
1
2
2
2
2
2
26
Earned Income Credit in Case of
Qualifying Children Who Fail to
Meet Certain Identification
Requirements
Credit Al owed in Case of Certain
1
20
21
22
23
25
25
27
28
30
31
252
Separated Spouses
Modification of Disqualified
24
330
198
200
225
229
238
233
231
240
251
2,399
Investment Income Test
Application of Earned Income Tax
-
738
746
764
781
798
814
831
849
867
885
8,074
Credit in Possession of the United
States
Temporary Special Rule for
-
3,185
-
-
-
-
-
-
-
-
-
3,185
Determining Earned Income for
Purposes of Earned Income Tax
Credit
Total of Earned Income Tax Credit
546
15,646
967
987
1,030
1,053
1,079
1,093
1,110
1,139
1,169
25,818
CRS-13

Provision
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2021-2031
Part 4—Dependent Care Assistance
Refundability and Enhancement of
2,127
5,837
-
-
-
-
-
-
-
-
-
7,964
Child and Dependent Care Tax
Credit
Increase in Exclusion for Employer-
78
39
-
-
-
-
-
-
-
-
-
117
Provided Dependent Care
Assistance
Total of Dependent Care Assistance
2,205
5,876
-
-
-
-
-
-
-
-
-
8,081
Part 5—Credits for Paid Sick and Family Leave
Extension and Modification of
4,409
1,742
(i )
(i )
(i )
(i )
(i )
-
-
-
-
6,151
Credits for Paid Sick and Family
Leave
Part 6—Employee Retention Credit
Extension and Modification of the
2,791
5,993
(i )
(i )
(i )
(i )
(i )
-
-
-
-
8,784
Employee Retention Credit
Part 7—Premium Tax Credit
Improving Affordability by Expanding
4,137
22,234
7,964
536
-23
-
-
-
-
-
-
34,847
Premium Assistance for Consumers
Temporary Modification of
4,696
1,565
-
-
-
-
-
-
-
-
-
6,261
Limitations on Reconciliation of Tax
Credits for Coverage Under a
Qualified Health Plan with Advance
Payments of Such Credit
Application of Premium Tax Credit
2,624
1,660
232
-
-
-
-
-
-
-
-
4,516
in Case of Individuals Receiving
Unemployment Compensation
During 2021
Total of the Premium Tax Credit
11,457
25,459
8,196
536
-23
-
-
-
-
-
-
45,624
CRS-14

link to page 17 link to page 17
Provision
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2021-2031
Part 8—Miscellaneous Provisions
Repeal of Election to Al ocation
-335
-1,277
-2,023 -2,284
-2,383 -2,334 -2,358
-2,385
-2,343
-2,283 -2,327
-22,331
Interest, Etc. on Worldwide Basis
Tax Treatment of Targeted EIDL

Estimate Not
Advances
Availablea
Tax Treatment of Restaurant

Estimate Not
Revitalization Grants
Availablea
Modification of Exceptions for
-
-146
-1,081
-751
-789
-829
-870
-913
-959
-1,007 -1,057
-8,403
Reporting of Third Party Network
Transactions
Total of Miscel aneous Provisions
-335
-1,423
-3,104 -3,035
-3,172
-3,163
-3,228
-3,298
-3,302
-3,290
-3,384
-30,734
Source: Joint Committee on Taxation, Estimated Revenue Effects Of H.R. 1319, The “American Rescue Plan Act Of 2021,” Scheduled For Consideration By The House Of
Representatives On February 26, 2021, JCX-12-21, February 26, 2021, at https://www.jct.gov/publications/2021/jcx-12-21/.
Notes: A negative number indicates the provision is estimated to result in a revenue gain. An (i) indicates a cost of less than $500,000. An (i ) indicates a gain of less than
$500,000.
a. The Joint Committee on Taxation (JCT) revenue estimate indicates that the cost estimate for this provision wil be provided b y the Congressional Budget Office.
The estimate is not included in JCT’s estimate of the revenue effects.

CRS-15

Tax Provisions for COVID-19 Relief: Subtitle G – Promoting Economic Security

Author Information

Molly F. Sherlock
Jane G. Gravelle
Specialist in Public Finance
Senior Specialist in Economic Policy

Margot L. Crandall-Hollick

Acting Section Research Manager

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
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under the direction of Congress. Information in a CRS Report should n ot be relied upon for purposes other
than public understanding of information that has been provided by CRS to Members of Congress in
connection with CRS’s institutional role. CRS Reports, as a work of the United States Government, are not
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Congressional Research Service
R46680 · VERSION 4 · UPDATED
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