Heroes Act: Revenue Provisions

Heroes Act: Revenue Provisions

Heroes Act: Revenue Provisions
Updated October 26, 2020
Congressional Research Service
https://crsreports.congress.gov
R46358

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ongress continues to consider proposals intended to al eviate the economic effects
associated with the Coronavirus Disease 2019, or COVID-19, pandemic. One such
C proposal, the Health and Economic Recovery Omnibus Emergency Solutions (HEROES)
Act (H.R. 6800), was introduced in the House on May 12, 2020, and passed by the House on May
15, 2020.1 To date, the Senate has not considered H.R. 6800. A revised version of The Heroes Act
(H.R. 8406) was introduced on September 29, 2020. The House adopted the revised version of
the Heroes Act on October 1, 2020, as a House amendment to the Senate amendment to H.R. 925.
Division F of H.R. 8406 (adopted as H.R. 925), or the COVID-19 Tax Relief Act of 2020,
contains a number of individual and business tax provisions, including
 a one-time direct payment to eligible individuals;
 enhanced benefits and/or expanded eligibility for the earned income tax credit
(EITC), child tax credit, and child and dependent care tax credit, and suspension
of the limitation on the deduction for state and local taxes paid;
 expanded utilization options for certain employee health and dependent care
benefits;
 expansions of tax credits for paid sick leave and paid family leave;
 tax benefits for businesses and employers, including tax credits for employers
retaining and hiring employees in businesses subject to COVID-19-related
interruptions and deductibility of expenses financed by forgiven Paycheck
Protection Program loans; and
 a permanent limitation on using noncorporate business losses to offset
nonbusiness income, and reduced ability to carry back recent net operating
losses.
The COVID-19 Tax Relief Act of 2020 was included in Division B of H.R. 6800. In addition to
the provisions above, the May 2020 version contained additional tax credits for employers and
employees in businesses susceptible to COVID-19-related interruptions and an expansion of
eligibility for the direct payments provided in the CARES Act.
Consideration of The Heroes Act follows enactment of other laws addressing the COVID-19
crisis. Those laws are (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 and (4) the Paycheck Protection Program and Health Care Enhancement Act
(P.L. 116-139).
Table 1 briefly summarizes the tax provisions in Division F of the September 2020 version of the
Heroes Act (H.R. 8406, adopted as H.R. 925). Table 2 briefly summarizes the major tax
provisions in Division B of the May 2020 version of the Heroes Act (H.R. 6800). Links to CRS
resources with additional relevant information, where available, are provided in both tables.

1 H.R. 6800, as passed by the House on May 15, 2020, is the Heroes Act (as opposed to the Health and Economic
Recovery Omnibus Emergency Solutions (HEROES) Act , which was the title of the bill when introduced).
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. For more on
other CARES Act provisions, see CRS Report R46299, Coronavirus Aid, Relief, and Econom ic Security (CARES) Act:
CRS Experts, by William L. Painter and Diane P. Horn.
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The Joint Committee on Taxation (JCT) estimated that the revenue provisions of the revised
Heroes Act (H.R. 8406, adopted as H.R. 925) would reduce federal revenue by $298.4 bil ion
over the FY2021-FY2030 budget window (Table 3).3 The JCT estimated that the earlier version
of the Heroes Act (H.R. 6800) would have reduced federal revenue by $762.4 bil ion over the
FY2020-FY2030 budget window (Table 4).4
Table 1. The Heroes Act (H.R. 8406, adopted as H.R. 925): Division F—Revenue
Provisions
(COVID-19 Tax Relief Act of 2020; September 2020)
Section Title
Description
CRS Resources
Title I—Economic Stimulus

Subtitle A—Additional Recovery Rebates to Individuals

Additional Recovery
Would enact additional direct payments for
For background, see
Rebates to Individuals
individuals. These payments would be structured

CRS Insight IN11513,
as refundable tax credits against 2020 income
COVID-19 and Direct
taxes, but would be issued (and hence received)
Payments to Individuals:
in 2020, as opposed to 2021 (when 2020 income
Comparison of Recent
tax returns wil be filed). Amount and eligibility
Proposals for a Second Round
for the advanced credit would general y be based
of Payments, by Margot L.
on information from 2019 income tax returns (or
Crandal -Hol ick.
2018 returns, if 2019 had not been filed).

Payments would equal $1,200 per eligible

CRS Report R46415, CARES
Act (P.L. 116-136) Direct
individual ($2,400 for married joint filers), and
Payments: Resources and
$500 for each eligible dependent.
Experts, coordinated by
The payment would phase out at a rate of $5 per
Margot L. Crandal -Hol ick.
$100 of income above $75,000 ($112,500 for

head of household filers, $150,000 for married

CRS Insight IN11282, COVID-
joint filers).
19 and Direct Payments to
Individuals: Summary of the
Eligible individuals would need to provide a
2020 Recovery
taxpayer ID—either an SSN or ITIN—to receive
Rebates/Economic Impact
the payment.
Payments in the CARES Act
These payments would general y be exempt from
(P.L. 116-136), by Margot L.
reduction for debts owed to or col ected by
Crandal -Hol ick.
governmental agencies (including past-due child
 CRS Insight IN11234, Tax
support) and private/commercial debts.
Cuts as Fiscal Stimulus:
For eligible individuals who did not file a 2019 or
Comparing a Payrol Tax Cut to
2018 income tax return and who were recipients
a One-Time Tax Rebate, by
of Social Security, Supplemental Security Income
Mol y F. Sherlock and
(SSI), or Department of Veterans Affairs (VA)
Donald J. Marples.
benefits, Treasury would be directed to issue

CRS Report RS21126, Tax
payments based on information provided to the
Cuts and Economic Stimulus:
Social Security Administration (SSA) or VA.
How Effective Are the
Would clarify that if a direct payment for a
Alternatives?, by Jane G.
specified Social Security, Supplemental Security
Gravel e.
Income (SSI), Railroad Retirement, or Veterans
beneficiary was deposited into the account of a

3 Joint Committee on T axation, JCX-21-20, Estimated Revenue Effects of the Revenue Provisions Contained in the
Heroes Act, As Passed by the House of Representatives on October 1, 2020 (Rules Com m ittee Print 116 -66), October
14, 2020.
4 Joint Committee on T axation, JCX-16-20, Estimated Revenue Effects of the Revenue Provisions Contained in H.R.
6800, T he “ Health and Economic Recovery Omnibus Emergency Solutio ns (‘HEROES’) Act,” As Passed By T he
House of Representatives on May 15, 2020, May 28, 2020.
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Section Title
Description
CRS Resources
representative payee (“payee”) or fiduciary, it
shal be used only for the benefit of the entitled
beneficiary. The payee and fiduciary enforcement
provisions would apply as under current law.
Treasury would be directed to conduct outreach
to other eligible nonfilers.
Any checks could not include the name,
signature, image, or likeness of any elected
official, including the President or Vice President
of the United States.
Treasury would be required to provide weekly
updates to Congress on the number and amount
of payments made.
If a taxpayer received a larger advanced credit in
2020 than they were eligible for on their 2020
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 2020 income tax return, they
could claim the difference on that return (filed in
2021).
Subtitle B—Earned Income Tax Credit

Strengthening the
Would temporarily for 2020 expand both
For background, see
Earned Income Tax
eligibility for and the amount of the EITC for

CRS Report R43805, The
Credit for Individuals
taxpayers without qualifying children by modifying
Earned Income Tax Credit
with No Qualifying
the eligibility age and credit formula.
(EITC): How It Works and
Childrena
Regarding eligibility age, would expand eligibility
Who Receives It, by Margot L.
for the earned income tax credit (EITC) for
Crandal -Hol ick and Gene
individuals with no qualifying children—
Falk.
sometimes referred to as the “childless EITC”—

by increasing the maximum eligibility age from 64
to 65, and by al owing eligible taxpayers ages 19
to 24 to claim the childless EITC so long as they
are not students. Qualified foster youth and
homeless youth aged 18-24 would be al owed to
claim the credit even if they are students.a
Regarding the credit amount, would temporarily
increase the childless EITC by increasing the
earned income amount and phaseout threshold
amounts to $9,720 and $11,590, respectively,
while also doubling the phase-in and phaseout
rates from 7.65% to 15.3%. The maximum EITC
would increase from $538 to $1,487 in 2020.
Taxpayers Eligible for
Would permanently al ow taxpayers who

Childless Earned Income
currently cannot claim the childless EITC because
Credit in Case of
al of their qualifying children do not have SSNs
Qualifying Children who
to be eligible to claim the childless EITC.
Fail to Meet Certain

Identification
Requirementsa
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Section Title
Description
CRS Resources
Credit Al owed in Case
Would permanently al ow married taxpayers

of Certain Separated
who file their tax returns as married filing
Spousesa
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.
Elimination of
Would permanently eliminate the disqualified

Disqualified Investment
investment income test. Under current law,
Income Testa
taxpayers with investment income over a certain
threshold—$3,650 in 2020—are ineligible for
claiming 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.
Application of Earned
Would permanently provide authority to make
For background, see
Income Tax Credit in
payments to Puerto Rico, American Samoa, and

CRS Report R44651, Tax
Possessions of the
mirror-code territories for amounts they pay out
Policy and U.S. Territories:
United Statesa
in the EITC. For Puerto Rico and American
Overview and Issues for
Samoa, such payments would be contingent upon
Congress, by Sean Lowry.
increasing the amount of their EITC or enacting
an EITC, respectively.

Temporary Special Rule
For the purposes of calculating their EITC on

for Determining Earned
their 2020 income tax return, would al ow
Income for Purposes of
taxpayers to substitute their 2019 earned income
Earned Income Tax
for their 2020 earned income if their earned
Credita
income at the end of 2020 was less than their
prior-year earned income.
Subtitle C—Child Tax Credit

Child Tax Credit
Would eliminate the phase-in of the refundable
For background, see
Improvements for 2020
portion of the child credit (often referred to as

CRS Report R41873, The
the “additional child credit” or ACTC) and
Child Tax Credit: Current Law,
eliminate the maximum amount of the ACTC
by Margot L. Crandal -
($1,400). Hence the child credit would be a “ful y
Hol ick.
refundable” $2,000 per child credit for that year,
(stil subject to the current law phaseout for

CRS Report R46502, The
higher-income taxpayers). As a result, families
Child Tax Credit: Selected
with little or no income would be able to receive
Legislative Proposals in the
the maximum amount of the child tax credit as an
116th Congress, by Margot L.
increase in their refund. (For these families, the
Crandal -Hol ick.
entire amount of their child tax credit would be

received as the ACTC.)
Would direct the IRS to establish a program to
advance the expanded credit to taxpayers on a
monthly basis (or as frequently as deemed
feasible by the Treasury Secretary). If the
advanced amounts were greater than the al owed
amount, the excess would be paid back by the
taxpayer.
Al changes would be temporary for 2020.
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Section Title
Description
CRS Resources
Application of Child Tax
Would effectively expand child credit eligibility to
For background, see
Credit in Possessionsa
residents of Puerto Rico and mirror-code

CRS Report R44651, Tax
territories by providing payments to Puerto Rico
Policy and U.S. Territories:
and the territories for amounts they pay out in
Overview and Issues for
the child credit. This change would be
Congress, by Sean Lowry.
permanent. Authorizes payments to American
Samoa in the amount that would have been paid

to residents of American Samoa if the credit
would have been provided to such residents.
Subtitle D—Dependent Care Assistance

Refundability and
Would create a more generous formula for the
For background, see
Enhancement of Child
child and dependent care tax credit (CDCTC)

CRS Report R44993, Child
and Dependent Care
and make the credit refundable for 2020. The
and Dependent Care Tax
Tax Credita
expanded formula would al ow eligible taxpayers
Benefits: How They Work and
to claim up to 50% of employment-related child
Who Receives Them, by
care expenses for the credit (up from 35%) and
Margot L. Crandal -Hol ick.
increase to $120,000 the income level at which
that percentage begins to phase out (up from
$15,000). Hence, the credit rate would phase
down to 20% when the taxpayer’s income was
greater than $180,000 (versus $43,000 under
current law). Would also double the maximum
amount of qualified expenses to $6,000 for
taxpayers with one qualifying dependent and
$12,000 for taxpayers with two or more
qualifying dependents (up from $3,000 and
$6,000, respectively). In addition, would
temporarily make the CDCTC refundable.
Increase in Exclusion for
Would increase the maximum amount of

Employer-Provided
qualifying child care expenses that eligible
Dependent Care
taxpayers could exclude from their income from
Assistancea
$5,000 to $10,500 for 2020.
Subtitle E—Credits for Paid Sick and Family Leave

Extension of Credits
The Families First Coronavirus Response Act
For more, see
(FFCRA; P.L. 116-127) includes refundable payrol

CRS Insight IN11243, Tax
tax credits for certain required paid sick and
Credit for Paid Sick and Family
family leave for 2020. This provision would
Leave in the Families First
extend the tax credits through February 28,
Coronavirus Response Act
2021.
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Repeal of Reduced Rate
The payrol tax credit for paid sick leave wages in
For more, see
of Credit for Certain
FFCRA is limited to $200 per day for certain

CRS Insight IN11243, Tax
Leavea
qualified leave taking, general y caring for an
Credit for Paid Sick and Family
individual affected by COVID-19 or caring for
Leave in the Families First
their child whose school or place of care is
Coronavirus Response Act
unavailable due to COVID-19. The credit is
(H.R. 6201) (Updated), by
limited to $511 per day if employees are taking
Mol y F. Sherlock.
other forms of qualified sick leave, general y for
their own COVID-19-related purposes. This
provision would increase the maximum tax credit
to $511 for al sick leave purposes in FFCRA.
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Section Title
Description
CRS Resources
Increase in Limitations
The tax credit for family leave wages is limited to
For more, see
on Credits for Paid
$200 per day, and $10,000 total per employee.

CRS Insight IN11243, Tax
Family Leavea
For self-employed individuals, the family leave
Credit for Paid Sick and Family
credit is limited to 50 days. This provision would
Leave in the Families First
increase the total credit amount to $12,000 per
Coronavirus Response Act
employee, and al ow self-employed individuals to
(H.R. 6201) (Updated), by
claim the credit for up to 60 days. This provision
Mol y F. Sherlock.
is effective as if included in FFCRA.
Election to Use Prior-
Average daily self-employment income is an
For more, see
Year Net Earnings from
amount equal to the net earnings from self-

CRS Insight IN11243, Tax
Self-Employment in
employment for the taxable year divided by 260.
Credit for Paid Sick and Family
Determining Average
This provision would al ow individuals to elect to
Leave in the Families First
Daily Self-Employment
use average daily self-employment income from
Coronavirus Response Act
Incomea
2019, instead of 2020, to compute the credit.
(H.R. 6201) (Updated), by
This provision is effective as if included in FFCRA.
Mol y F. Sherlock.
Federal, State, and Local
The payrol tax credits for paid sick and family
For more, see
Governments Al owed
leave in FFCRA do not apply to federal, state, or

CRS Insight IN11243, Tax
Tax Credits for Paid Sick
local government employers, or any agency or
Credit for Paid Sick and Family
and Paid Family and
instrumentality of such governments.
Leave in the Families First
Medical Leavea
Government employers are subject to new sick
Coronavirus Response Act
and family leave requirements in FFCRA. This
(H.R. 6201) (Updated), by
provision would al ow government employers to
Mol y F. Sherlock.
claim payrol tax credits for required sick and
family leave. This provision is effective as if
included in FFCRA.
Certain Technical
Technical changes would coordinate the
For more, see
Improvementsa
definitions of qualified wages for paid sick leave,

CRS Insight IN11243, Tax
paid family and medical leave, and the exclusion
Credit for Paid Sick and Family
of such leave from employer Old-Age, Survivors,
Leave in the Families First
and Disability Insurance (OASDI) tax. This
Coronavirus Response Act
provision is effective as if included in FFCRA.
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Credit Not Al owed to
This provision would provide that private-sector
For more, see
Certain Large
employers with 500 or more employees are not

CRS Insight IN11243, Tax
Employersa
eligible for tax credits for paid sick or family
Credit for Paid Sick and Family
leave. This restriction would not apply to federal,
Leave in the Families First
state, or local government employers. The
Coronavirus Response Act
provision would apply to wages paid after the
(H.R. 6201) (Updated), by
date of enactment.
Mol y F. Sherlock.
Subtitle F—Deduction of State and Local Taxes

Elimination for 2020
Taxpayers that itemize their deductions may
For more, see
Limitation on Deduction
claim a deduction for certain state and local taxes  CRS Report R46246, The
of State and Local Taxes
paid (the SALT deduction). The 2017 tax revision
SALT Cap: Overview and
(P.L. 115-97) limited SALT deduction claims for
Analysis, by Grant A.
tax years 2018 through 2025, set to $10,000 for
Driessen and Joseph S.
single taxpayers and married couples filing jointly
Hughes.
and $5,000 for married taxpayers filing
separately. That law also excluded foreign real

CRS Report RL32781,
property taxes paid from SALT deduction claims
Federal Deductibility of State
over the same time frame.
and Local Taxes, by Grant A.
Driessen and Steven
Would repeal the SALT deduction limit for tax
Maguire.
year 2020; would not modify the foreign real
property tax exclusion.
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Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Title II—Provisions to Prevent Business Interruption

Improvements to
Would rename the employee retention credit
For more, see
Employee Retention and
the employee retention and rehiring credit, and

CRS Insight IN11299,
Rehiring Credit
would modify the tax credit to (1) increase the
COVID-19: The Employee
credit rate from 50% to 80%; (2) increase the
Retention Tax Credit, by Mol y
amount of wages that can qualify for the credit
F. Sherlock.
from $10,000 annual y to $15,000 per quarter
(limited to $45,000 for the year); (3) modify

CRS Insight IN11436,
credit limitations for large employers, defining
Employment Tax Incentives to
large employers as those with more than 1,500
Promote Recovery from the
ful -time employees in 2019 and gross receipts of
COVID-19 Recession: Policy
more than $41.5 mil ion in 2019 (rather than an
Options, by Gary Guenther
employer with more than 100 employees); (4)
and Mol y F. Sherlock.
al ow a partial credit for businesses with a 10% to
50% decline in gross receipts; (5) al ow state and
local governments, and some federal
instrumentalities, to claim the credit; and (6)
provide that wages paid with federal government
grants are not credit-eligible.
Would apply retroactively to the effective date
provided in the CARES Act.
Certain Loan
Loan forgiveness for additional lenders to
For more on the Payment
Forgiveness and Other
participate in the Payment Protection Program,
Protection Program, see
Business Financial
advance payments for Emergency Injury Disaster

CRS Report R46284, COVID-
Assistance under CARES Loan (EIDL) grants, and payments of principle,
19 Relief Assistance to Smal
Act Not Includable in
interest, and fees on behalf of borrowers under
Businesses: Issues and Policy
Gross Income
covered loans, al authorized in the CARES Act,
Options, by Robert Jay
as wel as grants under the RESTAURANTS Act
Dilger, Bruce R. Lindsay, and
of 2020 (Section 607 of H.R. 8406), would not be
Sean Lowry.
included in gross income for tax purposes.


CRS Report R46397, SBA
Paycheck Protection Program
(PPP) Loan Forgiveness: In
Brief, by Robert Jay Dilger
and Sean Lowry.
For more on the EIDL program,
see

CRS Insight IN11370, SBA
EIDL and Emergency EIDL
Grants for COVID-19, by
Bruce R. Lindsay.
Clarification of
This section clarifies that expenses paid out of
For more, see
Treatment of Expenses
forgiven loans under the Payment Protection

CRS Insight IN11378, IRS
Paid or Incurred with
Program or other related payments that are
Guidance Says No Deduction
Proceeds from Certain
excluded from income would be deductible. This
Is Al owed for Business
Grants and Loans
legislation reverses recent Internal Revenue
Expenses Paid with Forgiven
Service guidance (Notice 2020-32) that held
PPP Loans, by Sean Lowry
these expenses were not deductible. The section
and Jane G. Gravel e.
also clarifies the language in the CARES Act
relating to exclusion of loan forgiveness from
income.
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Section Title
Description
CRS Resources
Title III—Net Operating Losses

Limitation on Excess
Would reinstitute the limits on noncorporate
For more, see
Business Losses of
business losses that existed prior to the CARES

CRS Report R46377, The
Noncorporate
Act and would make the limits permanent. The
Tax Treatment and Economics
Taxpayers Restored and
changes would apply to taxable years beginning
of Net Operating Losses, by
Made Permanenta
on or after January 1, 2018.
Mark P. Keightley.
Prior to the CARES Act, under revisions made by 
P.L. 115-97 (commonly referenced as the Tax

CRS Insight IN11240,
COVID-19: Potential Role of
Cuts and Jobs Act [TCJA]), pass-through business
Net Operating Loss (NOL)
owners could use losses to offset other
Carrybacks in Addressing the
nonbusiness income up to an annual limit:
Economic Effects, by Mark P.
$250,000 (single filers) or $500,000 (married
Keightley.
filers). Losses above these limits were considered
excess business losses and could be carried

CRS Insight IN11296, Tax
forward indefinitely subject to the more general
Treatment of Net Operating
rules for net operating losses (NOLs). These
Losses (NOLs) in the
limits on excess business losses are scheduled to
Coronavirus Aid, Relief, and
expire after 2025, at which time businesses wil
Economic Security (CARES)
not be limited in the amount of nonbusiness
Act, by Jane G. Gravel e.
income they may offset with business losses.
The CARES Act suspended the
$250,000/$500,000 limits on offsetting
nonbusiness income for 2018, 2019, and 2020.
Certain Taxpayers
This provision would limit the carryback of NOLs
For more, see
Al owed Carryback of
to losses incurred in 2019 and 2020. Losses could  CRS Report R46377, The
Net Operating Losses
be carried back until 2018. Businesses with
Tax Treatment and Economics
Arising in 2019 and
excessive employee compensation under IRC
of Net Operating Losses, by
2020a
162(m), golden parachute payments under IRC
Mark P. Keightley.
280G, or excessive dividend payment and stock
buybacks would be prohibited from carrying back

CRS Insight IN11240,
2019 and 2020 losses.
COVID-19: Potential Role of
Net Operating Loss (NOL)
Under the temporary revisions enacted by the
Carrybacks in Addressing the
CARES Act, businesses are currently al owed to
Economic Effects, by Mark P.
carry back losses generated in calendar years
Keightley.
2018, 2019, and 2020 to up to the five years
preceding the loss year. The CARES Act

CRS Insight IN11296, Tax
suspended the limit to 80% of taxable income for
Treatment of Net Operating
those years. After 2020, NOLs can only be
Losses (NOLs) in the
carried forward and are limited to 80% of taxable
Coronavirus Aid, Relief, and
income, under the rules adopted in the TCJA.
Economic Security (CARES)
Act, by Jane G. Gravel e.
Source: CRS analysis of The Heroes Act (H.R. 8406).
Notes:
a. This provision is the same as in H.R. 6800.
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Heroes Act: Revenue Provisions

Table 2. The Heroes Act (H.R. 6800): Division B—Revenue Provisions
(COVID-19 Tax Relief Act of 2020; May 2020)
Section Title
Description
CRS Resources
Title I—Economic Stimulus

Subtitle A—2020 Recovery Rebates Improvement

Dependents Taken into
Would make al dependents—including
For more, see
Account in Determining
dependent children over 16 years old and adult

CRS Insight IN11398, How
Credits and Rebates
dependents—eligible for the $500 amount
Would the Heroes Act (H.R.
included in the direct payments enacted under
6800) Modify the Direct
the CARES Act. Under the CARES Act, only child
Payments Enacted in the
tax credit-eligible children—general y dependent
CARES Act (P.L. 116-136)?, by
children 16 years old and younger—are eligible
Margot L. Crandal -Hol ick
for the $500 amount. This change would be
retroactive to enactment of the CARES Act.

CRS Insight IN11358, Older
Children, Adult Dependents,
and Eligibility for the 2020
Recovery Rebates, by Margot
L. Crandal -Hol ick.
Individuals Providing
Would al ow eligible taxpayers who provide a
For more, see
Taxpayer Identification
taxpayer ID number—either a Social Security

CRS Insight IN11398, How
Numbers Taken into
number (SSN) or individual taxpayer
Would the Heroes Act (H.R.
Account in Determining
identification number (ITIN)—to receive the
6800) Modify the Direct
Credits and Rebates
direct payment enacted under the CARES Act.
Payments Enacted in the
Under the CARES Act, eligible taxpayers and
CARES Act (P.L. 116-136)?, by
qualifying children general y have to have a work-
Margot L. Crandal -Hol ick
authorized SSN in order to receive the payment.
This change would be retroactive to enactment

CRS Insight IN11376,
of the CARES Act.
Noncitizens and Eligibility for
the 2020 Recovery Rebates,
by Margot L. Crandal -
Hol ick and Abigail F.
Kolker.
2020 Recovery Rebates
Would prohibit the CARES Act direct payments
For more, see
not Subject to Reduction from being offset by the Treasury for past-due

CRS Insight IN11398, How
or Offset with Respect
child support. Under the CARES Act, the direct
Would the Heroes Act (H.R.
to Past-Due Support
payments can general y not be reduced for debts
6800) Modify the Direct
owed to or col ected by governmental agencies,
Payments Enacted in the
but can be reduced for past-due child support.
CARES Act (P.L. 116-136)?, by
Margot L. Crandal -Hol ick

CRS Insight IN11322, The
Child Support Federal Tax
Offset of CARES Act Economic
Impact Payments, by Jessica
Tol estrup.
Protection of 2020
Would expand the provisions of the CARES Act
For more, see
Recovery Rebates
that currently protect 2020 recovery rebates

CRS Insight IN11398, How
from reduction or offset for specified types of
Would the Heroes Act (H.R.
governmental debts by exempting those rebates
6800) Modify the Direct
from garnishment, levy, attachment, and other
Payments Enacted in the
similar debt col ection actions by private or
CARES Act (P.L. 116-136)?, by
governmental creditors.
Margot L. Crandal -Hol ick.
Congressional Research Service
9

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Payments to
Would clarify that if a direct payment for a
For more, see
Representative Payees
specified Social Security, Supplemental Security

CRS Insight IN11398, How
and Fiduciaries
Income (SSI), Railroad Retirement, or Veterans
Would the Heroes Act (H.R.
beneficiary was deposited into the account of a
6800) Modify the Direct
representative payee (“payee”) or fiduciary, it
Payments Enacted in the
shal be provided to the entitled beneficiary or
CARES Act (P.L. 116-136)?, by
used only for the benefit of the entitled
Margot L. Crandal -Hol ick.
beneficiary. The payee and fiduciary enforcement
provisions would apply as under current law.
Under the CARES Act, the treatment of
payments deposited in the accounts of payees
and fiduciaries is not specified. This change would
be retroactive to enactment of the CARES Act.
Application to Taxpayers Would instruct Treasury to issue additional
For more, see
with Respect to Whom
payments in 2020 to individuals whose 2020

CRS Insight IN11398, How
Advance Payment has
direct payments under the CARES Act would
Would the Heroes Act (H.R.
Already Been Made
have been larger as a result of the previous
6800) Modify the Direct
changes (i.e., eligible for an additional $500 for an
Payments Enacted in the
adult dependent). The additional amount would
CARES Act (P.L. 116-136)?, by
be equal to their new rebate amount less the
Margot L. Crandal -Hol ick.
payment they already received in 2020.
Congressional Research Service
10

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Subtitle B—Additional Recovery Rebates to Individuals

Additional Recovery
Would enact additional direct payments for
For background, see
Rebates to Individuals
individuals. These payments would be structured

CRS Insight IN11397,
as refundable tax credits against 2020 income
COVID-19: Summary of the
taxes, but would be advanced (and hence
Direct Payments Proposed in
received) in 2020, as opposed to 2021 (when
the Heroes Act (H.R. 6800),
2020 income tax returns wil be filed). Amount
by Margot L. Crandal -
and eligibility for the advanced credit would
Hol ick.
general y be based on information from 2019
income tax returns (or 2018 returns, if 2019 had

CRS Insight IN11513,
not been filed).
COVID-19 and Direct
Payments to Individuals:
Payments would equal $1,200 per eligible
Comparison of Recent
individual ($2,400 for married joint filers), and
Proposals for a Second Round
$1,200 for each eligible dependent (up to three
of Payments, by Margot L.
dependents, as defined in Subtitle A).
Crandal -Hol ick.
The payment would phase out at a rate of $5 per

$100 of income above $75,000 ($112,500 for

CRS Report R46415, CARES
head of household filers, $150,000 for married
Act (P.L. 116-136) Direct
joint filers).
Payments: Resources and
Experts, coordinated by
Eligible individuals would need to provide a
Margot L. Crandal -Hol ick.
taxpayer ID—either an SSN or ITIN—to receive
the payment (as defined in subtitle A).
 CRS Insight IN11282, COVID-
19 and Direct Payments to
These payments would general y be exempt from
Individuals: Summary of the
reduction for debts owed to or col ected by
2020 Recovery
governmental agencies (including past-due child
Rebates/Economic Impact
support) and private/commercial debts (as
Payments in the CARES Act
defined in Subtitle A).
(P.L. 116-136), by Margot L.
For eligible individuals who did not file a 2019 or
Crandal -Hol ick.
2018 income tax return and who were recipients
 CRS Insight IN11234, Tax
of Social Security, Supplemental Security Income
Cuts as Fiscal Stimulus:
(SSI), or Department of Veterans Affairs (VA)
Comparing a Payrol Tax Cut to
benefits, Treasury would be directed to issue
a One-Time Tax Rebate, by
payments based on information provided to the
Mol y F. Sherlock and
Social Security Administration (SSA) or VA. (The
Donald J. Marples.
treatment of the payments regarding
representative payees would be the same as

CRS Report RS21126, Tax
described in Subtitle A.) Treasury would be
Cuts and Economic Stimulus:
directed to conduct outreach to other eligible
How Effective Are the
nonfilers.
Alternatives?, by Jane G.
Gravel e.
Any checks could not include the name,
signature, image, or likeness of any elected
official, including the President or Vice President
of the United States.
Treasury would be required to provide weekly
updates to Congress on the number and amount
of payments made.
If a taxpayer received a larger advanced credit in
2020 than they were eligible for on their 2020
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 2020 income tax return, they
could claim the difference on that return (filed in
2021).
Congressional Research Service
11

link to page 23 Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Subtitle C—Earned Income Tax Credit

Strengthening the
Would temporarily for 2020 expand both
For background, see
Earned Income Tax
eligibility for and the amount of the EITC for

CRS Report R43805, The
Credit for Individuals
taxpayers without qualifying children by modifying
Earned Income Tax Credit
with No Qualifying
the eligibility age and credit formula.
(EITC): How It Works and
Children
Regarding eligibility age, would expand eligibility
Who Receives It, by Margot L.
for the earned income tax credit (EITC) for
Crandal -Hol ick and Gene
individuals with no qualifying children—
Falk.
sometimes referred to as the “childless EITC”—

by increasing the maximum eligibility age from 64
to 65, and by al owing eligible taxpayers ages 19
to 24 to claim the childless EITC so long as they
are not students. Qualified foster youth and
homeless youth aged 18-24 would be al owed to
claim the credit even if they are students.a
Regarding the credit amount, would temporarily
increase the childless EITC by increasing the
earned income amount and phaseout threshold
amounts to $9,720 and $11,590, respectively,
while also doubling the phase-in and phaseout
rates from 7.65% to 15.3%. The maximum EITC
would increase from $538 to $1,487 in 2020.
Taxpayers Eligible for
Would permanently al ow taxpayers who

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

of Certain Separated
who file their tax returns as married filing
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.
Elimination of
Would permanently eliminate the disqualified

Disqualified Investment
investment income test. Under current law,
Income Test
taxpayers with investment income over a certain
threshold—$3,650 in 2020—are ineligible for
claiming 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.
Congressional Research Service
12

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Application of Earned
Would permanently provide authority to make
For background, see
Income Tax Credit in
payments to Puerto Rico, American Samoa, and

CRS Report R44651, Tax
Possessions of the
mirror-code territories for amounts they pay out
Policy and U.S. Territories:
United States
in the EITC. For Puerto Rico and American
Overview and Issues for
Samoa, such payments would be contingent upon
Congress, by Sean Lowry.
increasing the amount of their EITC or enacting
an EITC, respectively.

Temporary Special Rule
For the purposes of calculating their EITC on

for Determining Earned
their 2020 income tax return, would al ow
Income for Purposes of
taxpayers to substitute their 2019 earned income
Earned Income Tax
for their 2020 earned income if their earned
Credit
income at the end of 2020 was less than their
prior-year earned income.
Subtitle D—Child Tax Credit

Child Tax Credit
Would eliminate the phase-in of the refundable
For background, see
Improvements for 2020
portion of the child credit (often referred to as

CRS Report R41873, The
the “additional child credit” or ACTC) and
Child Tax Credit: Current Law,
eliminate the maximum amount of the ACTC
by Margot L. Crandal -
($1,400), making the credit “ful y refundable” for
Hol ick.
that year. As a result, families with little or no
income would be able to receive the maximum

amount of the child tax credit as a refund. (For
these families, the entire amount of their child
tax credit would be received as the ACTC.)
Would increase the eligibility age for a qualifying
child to include 17-year-olds.
Would increase the per-child credit amount to
$3,000 for each of a taxpayer’s qualifying children
ages 6 to 17 years, and $3,600 for each of a
taxpayer’s qualifying children aged 0-5.
Would direct the IRS to establish a program to
advance the expanded credit to taxpayers on a
monthly basis (or as frequently as deemed
feasible by the Treasury Secretary). If the
advanced amounts were greater than the al owed
amount, the excess would be paid back by the
taxpayer.
Al changes would be temporary for 2020.
Application of Child Tax
Would effectively expand child credit eligibility to
For background, see
Credit in Possessions
residents of Puerto Rico and mirror-code

CRS Report R44651, Tax
territories by providing payments to Puerto Rico
Policy and U.S. Territories:
and the territories for amounts they pay out in
Overview and Issues for
the child credit. This change would be
Congress, by Sean Lowry.
permanent. Authorizes payments to American
Samoa in the amount that would have been paid

to residents of American Samoa if the credit
would have been provided to such residents.
Congressional Research Service
13

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Subtitle E—Dependent Care Assistance

Refundability and
Would create a more generous formula for the
For background, see
Enhancement of Child
child and dependent care tax credit (CDCTC)

CRS Report R44993, Child
and Dependent Care
and make the credit refundable for 2020. The
and Dependent Care Tax
Tax Credit
expanded formula would al ow eligible taxpayers
Benefits: How They Work and
to claim up to 50% of employment-related child
Who Receives Them, by
care expenses for the credit (up from 35%) and
Margot L. Crandal -Hol ick.
increase to $120,000 the income level at which
that percentage begins to phase out (up from
$15,000). Hence, the credit rate would phase
down to 20% when the taxpayer’s income was
greater than $180,000 (versus $43,000 under
current law). Would also double the maximum
amount of qualified expenses to $6,000 for
taxpayers with one qualifying dependent and
$12,000 for taxpayers with two or more
qualifying dependents (up from $3,000 and
$6,000, respectively). In addition, would
temporarily make the CDCTC refundable.
Increase in Exclusion for
Would increase the amount of qualifying child

Employer-Provided
care expenses that eligible taxpayers could
Dependent Care
exclude from their income from $5,000 to
Assistance
$10,500 for 2020.
Subtitle F—Flexibility for Certain Employee Benefits

Increase in Carryover
Would permit employers to al ow participants in
For background, see
for Health Flexible
health flexible savings accounts to carry over

CRS Committee Print
Spending Arrangements
unspent amounts up to $2,750 (the maximum
CP10003, Tax Expenditures:
amount for 2020) in the plan year ending in 2020
Compendium of Background
to the plan year ending in 2021. IRS regulations
Material on Individual
al ow either a carryover of $550 or a grace
Provisions—A Committee Print
period of 2.5 months. IRS regulations released on
Prepared for the Senate
May 12, 2020 (Notice 2020-29 and Notice 2020-
Committee on the Budget,
33), al ow ful carryover through calendar year
2018, by Jane G. Gravel e et
2020 and increase on a permanent basis the $500
al. (“Exclusion of Benefits
carryover amount to 20% of the maximum
Provided Under Cafeteria
amount.
Plans,” pp. 751-757).
Carryover for
Would permit employers to al ow participants in
For background, see
Dependent Care Flexible
dependent care flexible savings accounts to carry

CRS Report R44993, Child
Spending Arrangements
over al unspent amounts (the maximum is
and Dependent Care Tax
$5,000) in plan year ending in 2020 to the plan
Benefits: How They Work and
year ending in 2021. Currently, unused benefits
Who Receives Them, by
are forfeited. IRS regulations released on May 12,
Margot L. Crandal -Hol ick.
2020 (Notice 2020-29), al ow ful carryover
through calendar year 2020.
Congressional Research Service
14

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Carryover of Paid Time
Would permit employers to al ow participants in
For background, see
Off
cafeteria benefit plans (which al ow participants

CRS Committee Print
to choose from certain pretax benefits) to carry
CP10003, Tax Expenditures:
over al unused paid time off for plans ending in
Compendium of Background
2020 to plans ending in 2021. Currently, unused
Material on Individual
benefits are forfeited.
Provisions—A Committee Print
Prepared for the Senate
Committee on the Budget,
2018, by Jane G. Gravel e et
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Change in Election
Would permit employers to al ow participants to
For background, see
Amount
make changes to 2020 health flexible savings

CRS Committee Print
accounts without regard to changes in status or
CP10003, Tax Expenditures:
to paid time off during 2020. Currently such
Compendium of Background
elections must be made prior to the plan year
Material on Individual
and can only be changed with certain changes in
Provisions—A Committee Print
status. IRS regulations released on May 12, 2020
Prepared for the Senate
(Notice 2020-29), al ow elections for changes in
Committee on the Budget,
health and dependent care coverage during
2018, by Jane G. Gravel e et
calendar year 2020.
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Extension of Grace
Would al ow a benefits plan to retain its status as
For background, see
Periods, Etc.
a cafeteria plan, health flexible savings account, or

CRS Committee Print
dependent care account if the grace period for a
CP10003, Tax Expenditures:
2020 plan is extended to 12 months after the end
Compendium of Background
of the 2020 plan year. Would also permit
Material on Individual
employers to al ow employees who cease
Provisions—A Committee Print
participation (for example, because of
Prepared for the Senate
termination) to receive unused benefits for the
Committee on the Budget,
rest of the plan year including the grace period.
2018, by Jane G. Gravel e et
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Plan Amendments
Would al ow employers to make retroactive
For background, see
amendments to cafeteria plans, health flexible

CRS Committee Print
spending arrangements, and dependent care
CP10003, Tax Expenditures:
arrangements to permit the changes made in
Compendium of Background
these provisions.
Material on Individual
Provisions—A Committee Print
Prepared for the Senate
Committee on the Budget,
2018, by Jane G. Gravel e et
al. (“Exclusion of Benefits
Provided Under Cafeteria
Plans,” pp. 751-757).
Congressional Research Service
15

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Subtitle G—Deduction of State and Local Taxes

Elimination for 2020 and
Taxpayers that itemize their deductions may
For more, see
2021 of Limitation on
claim a deduction for certain state and local taxes  CRS Report R46246, The
Deduction of State and
paid (the SALT deduction). The 2017 tax revision
SALT Cap: Overview and
Local Taxes
(P.L. 115-97) limited SALT deduction claims for
Analysis, by Grant A.
tax years 2018 through 2025, set to $10,000 for
Driessen and Joseph S.
single taxpayers and married couples filing jointly
Hughes.
and $5,000 for married taxpayers filing
separately. That law also excluded foreign real

CRS Report RL32781,
property taxes paid from SALT deduction claims
Federal Deductibility of State
over the same time frame.
and Local Taxes, by Grant A.
Driessen and Steven
Would repeal the SALT deduction limit for tax
Maguire.
years 2020 and 2021; would not modify the
foreign real property tax exclusion.
Title II—Additional Relief for Workers

Subtitle A—Additional Relief

Increase in Above-the-
Teachers are currently al owed an above-the-line
For background, see
Line Deduction for
deduction of up to $250 for unreimbursed out-

CRS Insight IN10021, The
Certain Expenses of
of-pocket supply costs, including books,
Deduction for Out-of-Pocket
Elementary and
computer equipment, software, and other
Teacher Expenses, by Mol y F.
Secondary School
supplemental classroom materials. This provision
Sherlock and Margot L.
Teachers
would permanently increase the deduction
Crandal -Hol ick.
amount to $500 starting in 2020, with the $500
amount adjusted for inflation over time.
Above-the-Line
Would provide first responders a permanent

Deduction Al owed for
above-the-line deduction al owing them to deduct
Certain Expenses of
up to $500 for unreimbursed uniform expenses
First Responders
or tuition and fees associated with professional
development courses related to service as a first
responder. First responders are defined as
employees who provide at least 1,000 hours of
service during the year as a law enforcement
officer, firefighter, paramedic, or emergency
technician. The deduction would be available
starting in 2020, with the $500 amount adjusted
for inflation over time.
Temporary Above-the-
Would al ow an above-the-line deduction in 2020
Line Deduction for
for unreimbursed uniform, supply, and equipment
Supplies and Equipment
expenses of COVID-19 front line employees.
of First Responders and
COVID-19 front line employees are defined as
COVID-19 Front Line
individuals performing at least 1,000 hours of
Employees
essential work in 2020. Essential work covers a
broad range of workers, defined in Division Q of
the Heroes Act, who general y have physical
interactions with persons or handle objects
handled by other persons or are employed in
essential industries (e.g., health care, first
responders, grocery stores, transportation).
Congressional Research Service
16

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Payrol Credit for
Would provide a refundable payrol tax credit for

Certain Pandemic-
pandemic-related employee benefit expenses. For
Related Employee
each employee, up to $5,000 in pandemic-related
Benefit Expenses Paid by
employee benefit expenses may be tax credit
Employers
eligible per quarter. For pandemic-related
essential employees, the tax credit amount is 50%
of benefit expenses paid (e.g., a tax credit of up
to $2,500 per quarter). The tax credit amount is
30% for other employees. The credit would be
available for pandemic-related employee benefit
expenses paid after March 12, 2020, and before
January 1, 2021.
A general fund transfer of revenue to the Old-
Age and Survivors Insurance Trust Fund, Federal
Disability Insurance Trust Fund, and Railroad
Retirement Trust Fund would be made to
maintain trust fund balances.
Subtitle B—Tax Credits to Prevent Business Interruption

Improvements to
Would modify the employee retention tax credit
For more, see
Employee Retention
to (1) increase the credit rate from 50% to 80%;

CRS Insight IN11299,
Credit
(2) increase the amount of wages that can qualify
COVID-19: The Employee
for the credit from $10,000 annual y to $15,000
Retention Tax Credit, by Mol y
per quarter (limited to $45,000 for the year); (3)
F. Sherlock.
modify credit limitations for large employers,
defining large employers as those with more than
1,500 ful -time employees in 2019 and gross
receipts of more than $41.5 mil ion in 2019
(rather than an employer with more than 100
employees); (4) al ow a partial credit for
businesses with a 10% to 50% decline in gross
receipts; and (5) al ow state and local
governments, and some federal instrumentalities,
to claim the credit.
Would apply retroactively to the effective date
provided in the CARES Act.
Congressional Research Service
17

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Payrol Credit for
Would provide a refundable payrol tax credit for

Certain Fixed Expenses
employers’ fixed costs, including rent or
of Employers Subject to
mortgage obligations and utility payments. A tax
Closure by Reason of
credit of 50% could be claimed on qualifying fixed
COVID-19
expenses. Qualifying expenses limited to the
lesser of qualified fixed expenses paid in the same
calendar quarter in 2019; $50,000; or the greater
of 25% of wages paid or 6.25% of gross receipts
during the same calendar quarter in 2019.
Eligible employers would be those with no more
than 1,500 ful -time employees in 2019 and gross
receipts of no more than $41.5 mil ion in 2019
who had operations ful y or partial y suspended
due to COVID-19 or who had a significant
decline in gross receipts (gross receipts were less
than 90% of gross receipts for the same calendar
quarter in 2019). Credit is available at a reduced
rate (or phases in) for employers with a decline
in gross receipts between 10% and 50%. Credit
could be claimed for fixed expenses paid or
accrued after March 12, 2020, and before January
1, 2021.
A general fund transfer of revenue to the Old-
Age and Survivors Insurance Trust Fund, Federal
Disability Insurance Trust Fund, and the Railroad
Retirement Trust Fund would be made to
maintain trust fund balances.
Business Interruption
Eligible self-employed individuals who have

Credit for Certain Self-
experienced a significant loss in income would be
Employed Individuals
al owed a refundable income tax credit. The
credit rate is 90%. The base of the credit is the
loss in self-employment income that exceeds a
10% reduction from 2019 to 2020, scaled using
the ratio of net self-employment earnings to self-
employment gross income in 2019. The
maximum amount of self-employment income
that can be taken into account in computing the
credit is the lesser of $45,000 or the reduction in
adjusted gross income (AGI) from 2019 to 2020.
The credit phases out at a rate of $50 for every
$100 of income once modified AGI exceeds
$60,000 ($120,000 for joint filers).
Subtitle C—Credits for Paid Sick and Family Leave

Extension of Credits
The Families First Coronavirus Response Act
For more, see
(FFCRA; P.L. 116-127) includes refundable payrol

CRS Insight IN11243, Tax
tax credits for certain required paid sick and
Credit for Paid Sick and Family
family leave for 2020. This provision would
Leave in the Families First
extend the tax credits through 2021.
Coronavirus Response Act
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Congressional Research Service
18

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Repeal of Reduced Rate
The payrol tax credit for paid sick leave wages in
For more, see
of Credit for Certain
FFCRA is limited to $200 per day for certain

CRS Insight IN11243, Tax
Leave
qualified leave taking, general y caring for an
Credit for Paid Sick and Family
individual affected by COVID-19 or caring for
Leave in the Families First
their child whose school or place of care is
Coronavirus Response Act
unavailable due to COVID-19. The credit is
(H.R. 6201) (Updated), by
limited to $511 per day if employees are taking
Mol y F. Sherlock.
other forms of qualified sick leave, general y for
their own COVID-19 related purposes. This
provision would increase the maximum tax credit
to $511 for al sick leave purposes in FFCRA.
Increase in Limitations
The tax credit for family leave wages is limited to
For more, see
on Credits for Paid
$200 per day, and $10,000 total per employee.

CRS Insight IN11243, Tax
Family Leave
For self-employed individuals, the family leave
Credit for Paid Sick and Family
credit is limited to 50 days. This provision would
Leave in the Families First
increase the total credit amount to $12,000 per
Coronavirus Response Act
employee, and al ow self-employed individuals to
(H.R. 6201) (Updated), by
claim the credit for up to 60 days. This provision
Mol y F. Sherlock.
is effective as if included in FFCRA.
Election to Use Prior-
Average daily self-employment income is an
For more, see
Year Net Earnings from
amount equal to the net earnings from self-

CRS Insight IN11243, Tax
Self-Employment in
employment for the taxable year divided by 260.
Credit for Paid Sick and Family
Determining Average
This provision would al ow individuals to elect to
Leave in the Families First
Daily Self-Employment
use average daily self-employment income from
Coronavirus Response Act
Income
2019, instead of 2020, to compute the credit.
(H.R. 6201) (Updated), by
This provision is effective as if included in FFCRA.
Mol y F. Sherlock.
Federal, State, and Local
The payrol tax credits for paid sick and family
For more, see
Governments Al owed
leave in FFCRA do not apply to federal, state, or

CRS Insight IN11243, Tax
Tax Credits for Paid Sick
local government employers, or any agency or
Credit for Paid Sick and Family
and Paid Family and
instrumentality of such governments.
Leave in the Families First
Medical Leave
Government employers are subject to new sick
Coronavirus Response Act
and family leave requirements in FFCRA. This
(H.R. 6201) (Updated), by
provision would al ow government employers to
Mol y F. Sherlock.
claim payrol tax credits for required sick and
family leave. This provision is effective as if
included in FFCRA.
Certain Technical
Technical changes would coordinate the
For more, see
Improvements
definitions of qualified wages for paid sick leave,

CRS Insight IN11243, Tax
paid family and medical leave, and the exclusion
Credit for Paid Sick and Family
of such leave from employer Old-Age, Survivors,
Leave in the Families First
and Disability Insurance (OASDI) tax. This
Coronavirus Response Act
provision is effective as if included in FFCRA.
(H.R. 6201) (Updated), by
Mol y F. Sherlock.
Credit Not Al owed to
This provision would provide that private-sector
For more, see
Certain Large Employers
employers with 500 or more employees are not

CRS Insight IN11243, Tax
eligible for tax credits for paid sick or family
Credit for Paid Sick and Family
leave. This restriction would not apply to federal,
Leave in the Families First
state, or local government employers. The
Coronavirus Response Act
provision would apply to wages paid after the
(H.R. 6201) (Updated), by
date of enactment.
Mol y F. Sherlock.
Subtitle D—Other Relief

Congressional Research Service
19

link to page 23 Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Payrol Tax Deferral
Would al ow businesses receiving Paycheck
For more, see
Al owed For Recipients
Protection Program loan forgiveness to defer

CRS Insight IN11260,
of Certain Loan
payment of payrol taxes under Section 2302 of
COVID-19 Economic Stimulus:
Forgiveness
the CARES Act.
Business Payrol Tax Cuts, by
Mol y F. Sherlock and
Donald J. Marples.
For general information on the
Paycheck Protection Program,
see

CRS Report R46284, COVID-
19 Relief Assistance to Smal
Businesses: Issues and Policy
Options, by Robert Jay
Dilger, Bruce R. Lindsay, and
Sean Lowry.
Emergency Financial Aid
Would exclude postsecondary emergency
For more information on CARES
Grants
financial aid grants awarded in response to the
Act Higher Education Provisions,
coronavirus emergency from gross income. Thus,
see
these grants would not be taxable. Excluded

CRS In Focus IF11497,
emergency financial aid would not reduce
CARES Act Higher Education
qualified expenses for the purposes of calculating
Provisions, coordinated by
the American Opportunity Tax Credit, Lifetime
Cassandria Dortch.
Learning Credit, or Tuition and Fees Deduction.
General y, education expenses used to calculate
these three tax benefits must be reduced by any
tax-free financial aid (i.e., excluded from gross
income), which may reduce the value of these tax
benefits.b
Certain Loan
Loan forgiveness for additional lenders to
For more on the Payment
Forgiveness and Other
participate in the Payment Protection Program,
Protection Program, see
Business Financial
advance payments for Emergency Injury Disaster

CRS Report R46284, COVID-
Assistance under CARES Loan (EIDL) grants, and payments of principle,
19 Relief Assistance to Smal
Act Not Includable in
interest, and fees on behalf of borrowers under
Businesses: Issues and Policy
Gross Business Income
covered loans, al authorized in the CARES Act,
Options, by Robert Jay
would not be included in gross income for tax
Dilger, Bruce R. Lindsay, and
purposes.
Sean Lowry.
For more on the EIDL program,
see

CRS Insight IN11370, SBA
EIDL and Emergency EIDL
Grants for COVID-19, by
Bruce R. Lindsay.
Authority to Waive
Would provide the Secretary of the Treasury
For more on the Payment
Certain Information
with the authority to waive information reporting
Protection Program, see
Reporting Requirements
requirements with respect to income that is

CRS Report R46284, COVID-
exempt from tax as excludible loan forgiveness
19 Relief Assistance to Smal
under the Paycheck Protection Program or under
Businesses: Issues and Policy
the exclusions for emergency financial grants for
Options, by Robert Jay
students, or the loans for additional lenders,
Dilger, Bruce R. Lindsay, and
EIDL, and payments of principle, interest and fees
Sean Lowry.
for covered loans.

Congressional Research Service
20

Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Clarification of
This section clarifies that expenses paid out of
For more, see
Treatment of Expenses
forgiven loans under the Payment Protection

CRS Insight IN11378, IRS
Paid or Incurred with
Program or other related payments that are
Guidance Says No Deduction
Proceeds from Certain
excluded from income would be deductible. This
Is Al owed for Business
Grants and Loans
legislation reverses recent Internal Revenue
Expenses Paid with Forgiven
Service guidance (Notice 2020-32) that held
PPP Loans, by Sean Lowry
these expenses were not deductible.
and Jane G. Gravel e.
Reinstatement of
Would repeal certain provisions of the CARES

Certain Protections for
Act that amended the Fostering Undergraduate
Taxpayer Return
Talent by Unlocking Resources for Education
Information
(FUTURE) Act (P.L. 116-91).
These specific CARES Act provisions:
(i) al ow for Department of Education and its
contractors to re-disclose specified IRS returns
and return information to designated persons,
who are not subject to certain taxpayer return
protection obligations, solely for the use in
financial aid programs; and
(i ) eliminate the requirement that the IRS
maintain a permanent system of standardized
records or accountings of al disclosures and re-
discloses made to carry out the Higher Education
Act of 1965.
Title III—Net Operating Losses

Limitation on Excess
Would reinstitute the limits on noncorporate
For more, see
Business Losses of
business losses that existed prior to the CARES

CRS Insight IN11240,
Noncorporate
Act and would make the limits permanent. The
COVID-19: Potential Role of
Taxpayers Restored and
changes would apply to taxable years beginning
Net Operating Loss (NOL)
Made Permanent
on or after January 1, 2018.
Carrybacks in Addressing the
Prior to the CARES Act, under revisions made by
Economic Effects, by Mark P.
P.L. 115-97 (commonly referenced as the Tax
Keightley.
Cuts and Jobs Act [TCJA]), pass-through business

owners could use losses to offset other

CRS Insight IN11296, Tax
Treatment of Net Operating
nonbusiness income up to an annual limit:
Losses (NOLs) in the
$250,000 (single filers) or $500,000 (married
Coronavirus Aid, Relief, and
filers). Losses above these limits were considered
Economic Security (CARES)
excess business losses and could be carried
Act, by Jane G. Gravel e.
forward indefinitely subject to the more general
rules for net operating losses (NOLs). These
limits on excess business losses are scheduled to
expire after 2025, at which time businesses wil
not be limited in the amount of nonbusiness
income they may offset with business losses.
The CARES Act suspended the
$250,000/$500,000 limits on offsetting
nonbusiness income for 2018, 2019, and 2020.
Congressional Research Service
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link to page 10 link to page 3 Heroes Act: Revenue Provisions

Section Title
Description
CRS Resources
Certain Taxpayers
This provision would limit the carryback of NOLs
For more, see
Al owed Carryback of
to losses incurred in 2019 and 2020. Losses could  CRS Insight IN11240,
Net Operating Losses
be carried back until 2018. Businesses with
COVID-19: Potential Role of
Arising in 2019 and 2020 excessive employee compensation under IRC
Net Operating Loss (NOL)
162(m), golden parachute payments under IRC
Carrybacks in Addressing the
280G, or excessive dividend payment and stock
Economic Effects, by Mark P.
buybacks would be prohibited from carrying back
Keightley.
2019 and 2020 losses.

CRS Insight IN11296, Tax
Under the temporary revisions enacted by the
Treatment of Net Operating
CARES Act, businesses are currently al owed to
Losses (NOLs) in the
carry back losses generated in calendar years
Coronavirus Aid, Relief, and
2018, 2019, and 2020 to up to the five years
Economic Security (CARES)
preceding the loss year. The CARES Act
Act, by Jane G. Gravel e.
suspended the limit to 80% of taxable income for
those years. After 2020, NOLs can only be
carried forward and are limited to 80% of taxable
income, under the rules adopted in the TCJA.
Source: CRS analysis of The Heroes Act (H.R. 6800).
Notes: Table 2 appears here as it appeared in the version of this report published on May 15, 2020. General y,
CRS resources that were published after May 15, 2020, that are related to provisions in the Sept ember 28, 2020,
version of the Heroes Act, are noted in Table 1. Some additional resources for subtitle A and subtitle B of H.R.
6800 that do not appear in the September 28, 2020, version of the Heroes Act are included in this table.
a. The legislation includes as part of the definition of a student someone carrying half or more of the normal
ful -time work load for their program of study, as defined under IRC §25A(b)(3).
b. On May 7, 2020, the IRS provided similar but less expansive guidance to the same effect. See IRS, “FAQs:
Higher Education Emergency Relief Fund and Emergency Financial Aid Grants under the CARES Act,” at
https://www.irs.gov/newsroom/faqs-higher-education-emergency-relief-fund-and-emergency-financial-aid-
grants-under-the-cares-act.

Congressional Research Service
22

Table 3. Revenue Losses of Division F of The Heroes Act (H.R. 8406), FY2021-FY2030
(in mil ions of dol ars)
Section Title
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2021-2030
Title I—Economic Stimulus

Subtitle A—Additional Recovery Rebates to Individuals

Additional Recovery Rebates to Individuals
306,911
-
-
-
-
-
-
-
-
-
306,911
Subtitle B—Earned Income Tax Credit

Strengthening the Earned Income Tax Credit for
9,603
-
-
-
-
-
-
-
-
-
9,603
Individuals with No Qualifying Children
Taxpayers Eligible for Childless Earned Income
Credit in Case of Qualifying Children who Fail to
-
2
2
1
1
1
2
2
2
2
15
Meet Certain Identification Requirements
Credit Al owed in Case of Certain Separated
-
21
21
22
23
25
25
27
28
30
221
Spouses
Elimination of Disqualified Investment Income
-
395
360
368
394
391
399
393
396
405
3,502
Test
Application of Earned Income Tax Credit in
82
702
720
736
753
770
785
801
818
836
7,003
Possessions of the United States
Temporary Special Rule for Determining Earned
Income for Purposes of Earned Income Tax
3,110
-
-
-
-
-
-
-
-
-
3,110
Credit
Subtitle C—Child Tax Credit

Child Tax Credit Improvements for 2020
22,913
699
710
721
725
721
311
316
320
316
27,753
Subtitle D—Dependent Care Assistance

Refundability and Enhancement of Child and
5,695
-
-
-
-
-
-
-
-
-
5,695
Dependent Care Tax Credit
Increase in Exclusion for Employer-Provided
2
-
-
-
-
-
-
-
-
-
2
Dependent Care Assistance
Subtitle E—Credits for Paid Sick and Family Leave

CRS-23

Section Title
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2021-2030
Credits for Paid Sick and Family Leave
11,387
-
-
-
-
-
-
-
-
-
11,387
Subtitle F—Deduction of State and Local Taxes

Elimination for 2020 Limitation on Deduction of
68,880
-3,335
-
-
-
-
-
-
-
-
65,545
State and Local Taxes
Total of Economic Stimulus
428,583
-1,516
1,813
1,848
1,896
1,908
1,522
1,539
1,564
1,589
440,747
Title II—Provisions to Prevent Business Interruption

Improvements to Employee Retention and
111,806
-
-
-
-
-
-
-
-
-
111,806
Rehiring Credit
Certain Loan Forgiveness and Other Business
Financial Assistance under CARES Act Not
No Revenue Effect
Includable in Gross Income
Clarification of Treatment of Expenses Paid or
Incurred with Proceeds from Certain Grants and
No Revenue Effect
Loans
Total of Provisions to Prevent Business Interruption
111,806
-
-
-
-
-
-
-
-
-
111,806
Title III—Net Operating Losses

Limitation on Excess Business Losses of
Noncorporate Taxpayers Restored and Made
-136,615
1,773
793
394
202
-8,913
-24,428
-25,517
-26,468
-27,461
-246,240
Permanent
Certain Taxpayers Al owed Carryback of Net
-55,910
2,830
4,457
6,969
8,965
8,979
6,024
4,104
2,678
3,018
-7,887
Operating Losses Arising in 2019 and 2020
Total of Net Operating Losses
-192,525
4,603
5,250
7,363
9,167
66
-18,404
-21,413
-23,790
-24,443
-254,127
Total of Division F
347,864
3,087
7,063
9,211
11,063
1,974
-16,882
-19,874
-22,226
-22,854
298,426
Source: Joint Committee on Taxation, JCX-21-20, Estimated Revenue Effects of the Revenue Provisions Contained in the Heroes Act, As Passed by the House of Representatives
on October 1, 2020 (Rules Committee Print 116-66), October 14, 2020.
Notes: A positive value indicates a reduction in federal revenue. A negative value indicates an increase in federal revenue.

CRS-24

Table 4. Revenue Losses of Division B of The Heroes Act (H.R. 6800), FY2020-FY2030
(in mil ions of dol ars)
Section Title
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2020-2030
Title I—Economic Stimulus

Subtitle A—2020 Recovery Rebates
20,410
2,268
-
-
-
-
-
-
-
-
-
22,678
Improvement
Subtitle B—Additional Recovery Rebates to
404,276
8,251
-
-
-
-
-
-
-
-
-
412,527
Individuals
Subtitle C—Earned Income Tax Credit

Strengthening the Earned Income Tax
Credit for Individuals with No Qualifying
-
10,140
-
-
-
-
-
-
-
-
-
10,140
Children
Taxpayers Eligible for Childless Earned
Income Credit in Case of Qualifying
-
-
1
1
1
1
1
2
2
2
2
13
Children who Fail to Meet Certain
Identification Requirements
Credit Al owed in Case of Certain
-
-
22
23
24
26
27
28
29
30
31
239
Separated Spouses
Elimination of Disqualified Investment
-
-
391
372
396
406
425
447
445
445
452
3,779
Income Test
Application of Earned Income Tax Credit
-
82
702
720
736
753
770
785
801
818
836
7,003
in Possessions of the United States
Temporary Special Rule for Determining
Earned Income for Purposes of Earned
-
3,110
-
-
-
-
-
-
-
-
-
3,110
Income Tax Credit
Subtitle D—Child Tax Credit
4,420
108,775
768
833
899
906
954
311
316
320
316
118,818
Subtitle E—Dependent Care Assistance

CRS-25

Section Title
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2020-2030
Refundability and Enhancement of Child
112
5,577
-
-
-
-
-
-
-
-
-
5,689
and Dependent Care Tax Credit
Increase in Exclusion for Employer-
35
141
-
-
-
-
-
-
-
-
-
176
Provided Dependent Care Assistance
Subtitle F—Flexibility for Certain Employee

Benefits
Increase in Carryover for Health Flexible
-15
-225
-94
-
-
-
-
-
-
-
-
-335
Spending Arrangements
Carryover for Dependent Care Flexible
-
-217
-54
-
-
-
-
-
-
-
-
-271
Spending Arrangements
Carryover of Paid Time Off
Estimate included in other provisions

Change in Election Amount
Estimate included in other provisions

Extension of Grace Periods, Etc.
Estimate included in other provisions

Plan Amendments
Estimate included in other provisions

Subtitle G—Deduction of State and Local
1,623
94,360
44,993
-4,381
-
-
-
-
-
-
-
136,595
Taxes
Total of Economic Stimulus
430,861
232,262
46,729
-2,432
2,056
2,092
2,177
1,573
1,593
1,615
1,637
720,161
Title II—Additional Relief for

Workers
Subtitle A—Additional Relief

Increase in Above-the-Line Deduction
for Certain Expenses of Elementary and

162
138
144
172
173
181
214
241
211
213
1,848
Secondary School Teachers
CRS-26

Section Title
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2020-2030
Above-the-Line Deduction Al owed for
103
180
183
186
190
198
205
208
210
213
221
2,098
Certain Expenses of First Responders
Temporary Above-the-Line Deduction
for Supplies and Equipment of First
775
560
-
-
-
-
-
-
-
-
-
1,335
Responders and COVID-19 Front Line
Employees
Payrol Credit for Certain Pandemic-
Related Employee Benefit Expenses Paid
38,529
4,316
-
-
-
-
-
-
-
-
-
42,845
by Employers
Subtitle B—Tax Credits to Prevent Business

Interruption
Improvements to Employee Retention
130,970
32,601
-
-
-
-
-
-
-
-
-
163,571
Credit
Payrol Credit for Certain Fixed
Expenses of Employers Subject to
24,441
6,110
-
-
-
-
-
-
-
-
-
30,552
Closure by Reason of COVID-19
Business Interruption Credit for Certain
17,034
4,259
-
-
-
-
-
-
-
-
-
21,293
Self-Employed Individuals
Subtitle C—Credits for Paid Sick and Family
8,588
20,134
3,286
-
-
-
-
-
-
-
-
32,008
Leave
Subtitle D—Other Relief

Payrol Tax Deferral Al owed For
9,498
8,091
-8,584
-8,478
-
-
-
-
-
-
-
528
Recipients of Certain Loan Forgiveness
Emergency Financial Aid Grants
-
269
67
-
-
-
-
-
-
-
-
337
Certain Loan Forgiveness and Other
Business Financial Assistance under
No Revenue Effect
CARES Act Not Includable in Gross
Business Income
CRS-27

Section Title
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2020-2030
Authority to Waive Certain Information
No Revenue Effect
Reporting Requirements
Clarification of Treatment of Expenses
Paid or Incurred with Proceeds from
No Revenue Effect
Certain Grants and Loans
Reinstatement of Certain Protections for
Negligible Revenue Effect
Taxpayer Return Information
Total of Additional Relief for Workers
229,938
76,682
-4,910
-8,148
362
371
386
422
451
424
434
296,415
Title III—Net Operating Losses

Limitation on Excess Business Losses of
Noncorporate Taxpayers Restored and
-64,160
-72,455
1,773
793
394
202
-8,913
-24,428
-25,517
-26,468
-27,461
-246,240
Made Permanent
Certain Taxpayers Al owed Carryback of
Net Operating Losses Arising in 2019
-54,181
-1,729
2,830
4,457
6,969
8,965
8,979
6,024
4,104
2,678
3,018
-7,887
and 2020
Total of Net Operating Losses
-118,341
-74,184
4,603
5,250
7,363
9,167
66
-18,404
-21,413
-23,790
-24,443
-254,127
Total of Division B
542,458
234,760
46,422
-5,330
9,781
11,630
2,629
-16,409
-19,369
-21,751
-22,372
762,449
Source: Joint Committee on Taxation, JCX-16-20, Estimated Revenue Effects of the Revenue Provisions Contained in H.R. 6800, The “Health and Economic Recovery Omnibus
Emergency Solutions (‘HEROES’) Act,” As Passed By The House of Representatives on May 15, 2020, May 28, 2020.
Notes: A positive value indicates a reduction in federal revenue. A negative value indicates an increase in federal revenue.

CRS-28

Heroes Act: Revenue Provisions

Author Information

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

Margot L. Crandall-Hollick
Mark P. Keightley
Acting Section Research Manager
Specialist in Economics

Grant A. Driessen
Donald J. Marples
Specialist in Public Finance
Specialist in Public Finance

Acknowledgments
Joseph S. Hughes, Research Assistant in the Government & Finance Division, assisted with the update of
this report.

Disclaimer
This document was prepared by the Congressional Research Service (CRS). CRS serves as nonpartisan
shared staff to congressional committees and Members of Congress. It operates solely at the behest of and
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
subject to copyright protection in the United States. Any CRS Report may be reproduced and distributed in
its entirety without permission from CRS. However, as a CRS Report may include copyrighted images or
material from a third party, you may need to obtain the permission of the copyright holder if you wish to
copy or otherwise use copyrighted material.

Congressional Research Service
R46358 · VERSION 7 · UPDATED
29