The American Rescue Plan Act of 2021 (ARPA;
P.L. 117-2): Title IX, Subtitle G—Tax
Provisions Related to Promoting Economic
Security
Updated March 16, 2021
Congressional Research Service
https://crsreports.congress.gov
R46680
Congressional Research Service
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Contents
Tables
Table 1. American Rescue Plan Act of 2021 (ARPA; P.L. 117-2): Title IX, Subtitle G—
Tax Provisions Related to “Promoting Economic Security”................................................. 3
Table 2. American Rescue Plan Act of 2021 (ARPA; H.R. 1319): Title IX, Subtitle G—
Tax Provisions Related to “Promoting Economic Security” as passed the House of
Representatives February 27, 2021................................................................................ 14
Table 3. Estimated Cost of Title IX, Subtitle G of the American Rescue Plan Act of 2021
(ARPA; P.L. 117-2)..................................................................................................... 24
Table 4. Estimated Cost of Title IX, Subtitle G of the American Rescue Plan Act of 2021
(ARPA; H.R. 1319) as passed the House of Representatives February 27, 2021 ................... 27
Contacts
Author Information ....................................................................................................... 30
Congressional Research Service
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
he American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) was signed into law by
President Biden on March 11, 2021. ARPA is the latest in a series of Coronavirus Disease
T 2019 (COVID-19)-related relief and economic stimulus legislation.
Consideration of ARPA began early in the 117th Congress. On February 8, 2021, House Ways and
Means Committee 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). On March 4,
2021, the Senate version of the American Rescue Plan Act of 2021, S.Amdt. 891 to H.R. 1319,
was proposed.2 On Saturday March 6, 2021, the Senate passed H.R. 1319, as amended by
S.Amdt. 891. On March 10, 2021, the House passed H.R. 1319, as amended by S.Amdt. 891. On
March 11, 2021, the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2) was signed into law.
The versions of the bil passed on March 6 in the Senate and March 10 in the House are identical
to the law as enacted. This report summarizes the tax provisions in Title IX, Subtitle G of the
American Rescue Plan Act.3
Title IX, Subtitle G of the American Rescue Plan Act (P.L. 117-2)
provides a one-time direct payment of $1,400 per person to eligible households;
temporarily expands 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 expands the earned income tax credit (EITC) for workers without
qualifying children;
temporarily expands the child and dependent care credit for most taxpayers and
temporarily expands the exclusion for child and dependent care expenses;
modifies and extends the payroll tax credits for employer-provided paid sick and
paid family leave;
further extends the employee retention tax credit;
temporarily enhances benefits and/or expands eligibility for the health insurance
premium tax credit (PTC);
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 the text of S.Amdt. 891 as introduced on March 4, 2021, see https://www.budget.senate.gov/imo/media/doc/
American%20Rescue%20Plan%20Act%20SENAT E.pdf .
3 Revenue provisions in T itle IX, Subtitle H, Pensions, are described in CRS In Focus IF11766,
Pension Provisions in
Budget Reconciliation, by Elizabeth A. Myers and John J. T opoleski; and CRS In Focus IF11765,
Special Financial
Assistance to Multiem ployer Plans, by John J. T opoleski and Elizabeth A. Myers. T itle IX, Subtitle H also includes an
expansion of the Internal Revenue Code (IRC) §162(m) limit on excessive employee compensation, effective after
December 31, 2026. T he provision would deny deduction of compensation in excess of $1 million to certain highly
paid employees, plus the CEO or CFO, at publicly traded companies. T he Joint Committee on T axation (JCT ) estimates
that the provision will generate $7.8 billion in revenue between FY2016 and FY2031. T itle IX, Subtitle A includes a
provision to exclude up to $10,200 in unemployment compensation benefits from tax in 2020 for taxpayers with
modified AGI of less than $150,000. JCT estimates that this provision will reduce revenues by $25.0 billion in FY2021.
See CRS In Focus IF11782,
Federal Taxation of Unem ploym ent Insurance Benefits, by Julie M. Whittaker, Katelin P.
Isaacs, and Molly F. Sherlock. T itle IX, Subtitle A also extends temporary limits on business losses that apply to
noncorporate taxpayers. JCT estimates that this provision will generate $31.0 billion in revenue between FY2026 and
FY2031. For background, see CRS Report R46377,
The Tax Treatm ent and Econom ics of Net Operating Losses, by
Mark P. Keightley.
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
repeals a provision that al ows worldwide al ocation of interest for the foreign tax
credit limit, decreasing foreign tax credits in some cases;
provides that advances against Economic Injury Disaster Loans that are not
repaid and grants under the Restaurant Revitalization Fund are excluded from
income, and deductions for associated expenses are al owed;
modifies reporting thresholds for third-party settlement organizations; and
temporarily excludes most forgiven student loan debt from taxation.
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);4
(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).5
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).6 Legislation introduced in the Senate (the American Workers, Families,
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.7
Table 1 of this report summarizes the tax provisions in Title IX, Subtitle G of the American
Rescue Plan Act of 2021 (ARPA; P.L. 117-2) and provides links to CRS resources containing
additional information.
Table 2 of this report summarizes the tax provisions in Title IX, Subtitle
G of the American Rescue Plan Act (ARPA; H.R. 1319) as passed by the House of
Representatives on February 27, 2021, which differs from the version of the bil as passed by the
Senate on March 6, 2021, passed by the House on March 10, 2021, and signed by President Biden
on March 11, 2021. Joint Committee on Taxation (JCT) revenue estimates for these provisions in
both the law and the House-passed bil from February 27, 2021 are included i
n Table 3 a
nd Table
4, respectively.
4 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.
5 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.
6 For more information on tax provisions in the Heroes Act, see CRS Report R46358,
Heroes Act: Revenue Provisions,
coordinated by Molly F. Sherlock.
7 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.
Congressional Research Service
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Additional Resources
Congressional Budget Office,
Estimated Budgetary Effects of H.R. 1319,
American Rescue Plan Act of 2021, March 10, 2021, at https://www.cbo.gov/
publication/57056.
Joint Committee on Taxation,
Estimated Revenue Effects Of H.R. 1319, The
“American Rescue Plan Act Of 2021,” As Amended By The Senate, Scheduled
for Consideration by the House of Representatives, JCX-14-21, March 9, 2021, at
https://www.jct.gov/publications/2021/jcx-14-21/.
Joint Committee on Taxation,
Estimated Revenue Effects Of An Amendment in
the Nature of a Substitute to H.R. 1319, The “American Rescue Plan Act Of
2021,” As Passed by the House of Representatives And Scheduled for
Consideration by the Senate, JCX-13-21, March 4, 2021, at https://www.jct.gov/
publications/2021/jcx-13-21/.
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/.8
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/.
Joint Committee on Taxation,
Technical Explanation of the Modification of
Exceptions of Reporting Third Party Network Transactions in New Section 9674
of Subtitle IX of the American Rescue Plan Act of 2021, as Amended, by the
Proposed Manager’s Amendment, February 26, 2021, at https://www.jct.gov/
publications/2021/technical-explanation-of-section-9674-of-hr-1319/.
Table 1. American Rescue Plan Act of 2021 (ARPA; P.L. 117-2): 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
Enacts a third round of direct payments for
For more information, see
Individuals
individuals and households (“stimulus checks”).
CRS Insight IN11604,
COVID-
These payments are structured as refundable tax
19 and Direct Payments:
credits against 2021 income taxes, but are issued
Frequently Asked Questions
(and hence received) in 2021, as opposed to
(FAQs) About the Third Round of
2022 (when 2021 income tax returns wil be
“Stimulus Checks” in the
filed). Amount and eligibility for the advanced
American Rescue Plan Act of
credit is general y based on information from
8 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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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
2020 income tax returns (or 2019 returns, if
2021 (ARPA; P.L. 117-2), by
2020 returns have not been filed when the
Margot L. Crandal -Hol ick.
advanced credit is initial y issued). For households CRS Insight IN11605,
COVID-
whose payment was based on 2019 income data,
19 and Direct Payments:
and who would be eligible to receive a larger
Comparison of First and Second
payment based on 2020 data, the IRS is directed
Round of “Stimulus Checks” to
to issue a supplementary payment (a “top up”)
the Third Round in the American
within 90 days of the tax filing deadline or
Rescue Plan Act of 2021 (ARPA;
September 1, 2021, whichever date is earlier.
P.L. 117-2), by Margot L.
Payments are general y issued per household and
Crandal -Hol ick
equal the sum of $1,400 per eligible individual
($2,800 for married joint filers) and $1,400 for
CRS Insight IN11624,
COVID-
19 and Direct Payments: How
each eligible dependent (including older children
Do the “Stimulus Check”
and adult dependents). For each individual who
Phaseouts Differ Between the
died before January 1, 2021, the payment amount
House-Passed and Senate-Passed
is reduced from $1,400 to $0.
American Rescue Plan?, by
The payment phases out ratably (i.e.,
Margot L. Crandal -Hol ick.
proportional y) between $75,000 and $80,000 for
single filers, $112,500 and $120,000 for head of
CRS Insight IN11628,
Estimated
household filers, and $150,000 and $160,000 for
“Direct Payments” by State
married joint filers. The larger the total credit
Under the House and Senate
amount, the faster the payment phases out using
Versions of the American Rescue
this method.
Plan Act of 2021 (H.R. 1319), by
Conor F. Boyle and Jameson
Eligible individuals and dependents general y need
A. Carter.
to have a social security number (SSN) to receive
the payment. (Adoption taxpayer ID numbers are
For background, see
also valid for dependents.) The maximum
CRS Report R46415,
CARES
payment amount ($1,400) is reduced to $0 for
Act (P.L. 116-136) Direct
each otherwise eligible individual or qualifying
Payments: Resources and
dependent who does not have an SSN (i.e., they
Experts, coordinated by Margot
have an individual taxpayer identification number,
L. Crandal -Hol ick.
or ITIN, instead). This provision does not apply
CRS Insight IN11576,
COVID-
to married members of the Armed Forces if at
19 and Direct Payments to
least one spouse has an SSN. In such cases, they
Individuals: Comparison of the
are eligible for up to $2,800. If no eligible
Second Round of “Stimulus
individual has an SSN (i.e., an unmarried taxpayer
Checks” in P.L. 116-260 to the
does not have an SSN or neither spouse of a
First Round in the CARES Act
married joint filing couple has an SSN), they are
(P.L. 116-136), by Margot L.
stil eligible to receive a payment for a qualifying
Crandal -Hol ick.
dependent with an SSN.
CRS Insight IN11575,
COVID-
The advanced payment of the credit is general y
19 and Direct Payments to
exempt from offset by Treasury prior to when
Individuals: Frequently Asked
the payment is issued for certain past-due debts
Questions (FAQs) About the
owed by the recipient (including past-due child
Second Round of “Stimulus
support). However, the amount the taxpayer
Checks” in P.L. 116-260, by
claims as a credit on their 2021 tax returns will
Margot L. Crandal -Hol ick.
general y be subject to offset. The law does not
include protections for garnishment or levy (debt
CRS Insight IN11580,
COVID-
col ection actions that occur after the payments
19 and Direct Payments:
are received by households).
Summary of the CASH Act (H.R.
9051, 116th Congress)
For eligible individuals who did not file a 2020 or
Modifications to “Stimulus
2019 income tax return, the IRS is given broad
Checks,
” by Margot L. Crandal -
authority to make payments based on
Hol ick.
information available to the Treasury, in a similar
manner as was done with the second round of
payments enacted under P.L. 116-260.
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
Treasury is 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 are not taxable. In addition, like
other tax credits, these payments do 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 receives a larger advanced credit in
2021 than they are eligible for on their 2021
income tax return, they general y are not
required to pay it back. If an individual receives
an advanced payment less than what they are
eligible for on their 2021 income tax return, they
can claim the difference on their return (filed in
2022).
Part 2—Child Tax Credit
Child Tax Credit
For 2021, temporarily increases the amount of
For more information, see
Improvements for
the child tax credit for low- and moderate-
CRS Insight IN11613,
The Child
2021
income taxpayers to up to $3,600 per child for a
Tax Credit: Temporary Expansion
young child and up to $3,000 for older children
for 2021 Under the American
by modifying several provisions of the existing
Rescue Plan Act of 2021 (ARPA;
credit. First, the law eliminates the earned-
P.L. 117-2), by Margot L.
income-based phase-in of the refundable portion
Crandal -Hol ick.
of the child credit (often referred to as the
“additional child credit” or ACTC) and eliminates
For background, see
the maximum amount of the ACTC ($1,400).
CRS Report R41873,
The Child
Hence, the child credit is “ful y refundable” and
Tax Credit: How It Works and
available to otherwise eligible taxpayers with no
Who Receives It, by Margot L.
earned income. Second, the law increases the
Crandal -Hol ick.
maximum age for an eligible child to 17. Third,
CRS Report R46502,
The Child
the law increases the maximum amount of the
Tax Credit: Selected Legislative
credit from $2,000 per child to $3,600 per child
Proposals in the 116th Congress,
for a young child (0-5 years old) and $3,000 per
by Margot L. Crandal -Hol ick.
child for an older child (6-17 years old). This
increase in the maximum child credit of $1,600
per child for young children and $1,000 per child
for older children gradual y phases out at a rate
of 5% as income exceeds specified thresholds
until the credit amount equals the pre-ARPA
maximum of $2,000 per child. These thresholds
are $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 phases down to $2,000 per child will
depend on the number and age of qualifying
children.) For most families, the credit then
remains at its pre-ARPA level and phases out
when income exceeds the pre-ARPA thresholds
of $200,000 ($400,000 for married joint filers)
.a Directs the Treasury to issue half of the
expected 2021 credit in periodic payments
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
beginning July 1, 2021. These periodic payments
are general y of equal size. The remaining half of
the total 2021 credit will be claimed on a 2021
income tax return filed in early 2022. The
amount of the payments advanced in 2021 is
estimated based on 2020 income tax data, or if
unavailable, 2019 income tax data. The advanced
child credit payments wil 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 wil general y
need to repay total aggregate advanced payments.
In cases where a taxpayer receives excess
advanced payments due to net changes in the
number of qualifying children between 2020 (or
2019) and 2021, repayment obligations will 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 will 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 will 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 will need to repay the entire
amount of the overpayment.
The law creates an online portal to al ow
taxpayers the options to either opt out of
receiving advanced payments or provide
information regarding changes in income, marital
status, and number of qualifying children in order
to modify the advanced credit amounts.
Advanced payments will 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. The law does not include protection for
garnishment and levy, debt col ection actions that
tend to occur after a payment is received (i.e.,
deposited in a bank account).
The law al ows the Treasury to adjust income tax
withholding to accommodate these advance
payments.
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
Advanced payments are general y not available to
eligible residents of U.S. territories.
Application of the
Effectively expands 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 will make
and U.S. Territories: Overview
payments equal to the territory’s costs of the
and Issues for Congress, by Sean
child tax credit. For American Samoa (a non-
Lowry.
mirror code territory), the Treasury will 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) will file
for the credit directly with the IRS.
Part 3—Earned Income Tax Credit
Strengthening the
For 2021, temporarily expands both eligibility for
For more information, see
Earned Income Tax
and the amount of the earned income tax credit
CRS Insight IN11610,
The
Credit for Individuals
(EITC) for taxpayers without qualifying children
“Childless” EITC: Temporary
with no Qualifying
by modifying the eligibility age and credit formula.
Expansion for 2021 under the
Children
Regarding eligibility age, expands eligibility for the
American Rescue Plan Act of
EITC for individuals with no qualifying children—
2021 (ARPA; P.L. 117-2), by
sometimes referred to as the “childless” EITC—
Margot L. Crandal -Hol ick.
by reducing the minimum eligibility age from 25
For background, see
to 19 for most workers. In other words, this
change al ows most eligible workers ages 19 to
CRS Report R43805,
The
24 to claim the childless EITC. For students who
Earned Income Tax Credit
are attending school at least part-time, the age
(EITC): How It Works and Who
limit is temporarily reduced from 25 to 2
4.b For
Receives It, by Margot L.
former foster children and youth who are
Crandal -Hol ick, Gene Falk,
homeless, the minimum age is temporarily
and Conor F. Boyle.
reduced from 25 to 18. The law also temporarily
eliminates the upper age limit, so workers aged
65 and older are eligible.
Regarding the credit amount, temporarily
increases 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 increases from $543 to
$1,502 in 2021.
Taxpayer Eligible for
Permanently al ows taxpayers who currently
Childless Earned
cannot claim the childless EITC because al of
Income Credit in Case their qualifying children do not have SSNs to be
of Qualifying Children
eligible to claim the childless EITC.
Who Fail to Meet
Certain Identification
Requirements
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
Credit Al owed in
Permanently al ows married taxpayers who file
Case of Certain
their tax returns as married filing separately to
Separated Spouses
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
Permanently modifies the disqualified investment
Disqualified
income test. Prior to ARPA, taxpayers with
Investment Income
investment income over a certain threshold—
Test
$3,650 in 2020 and 2021—were 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 permanently
raises this amount to $10,000 and annual y
adjusts it for inflation beginning in 2022.
Application of Earned
Permanently provides 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 are contingent upon those
territories 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, al ows taxpayers to
Earned Income for
substitute their 2019 earned income for their
Purposes of Earned
2021 earned income if their earned income at the
Income Tax Credit
end of 2021 is less than their 2019 earned
income.
Part 4—Dependent Care Assistance
Refundability and
For 2021, temporarily expands the child and
For background, see
Enhancement of Child
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 law increases
Crandal -Hol ick.
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 law also
increases the credit rate for workers with
$185,000 or less of income (the credit rate
remains the same as under current law for those
with income over $185,000 up to $400,000 [i.e.,
20%], and is 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 increases to 50% (from 35%) of
expenses. This 50% credit rate gradual y phases
down to 20% until taxpayers have $185,000 of
income. For those with more than $185,000 of
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The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
income up to $400,000, the credit rate then
remains at 20%, gradual y fal ing to zero when
income exceeds $440,000. As a result, those with
income over $440,000 are not eligible for the
credit.
By making the credit refundable, the law
effectively expands eligibility to lower-income
taxpayers. Prior to ARPA, the CDCTC was a
nonrefundable credit, meaning the value of the
credit could not exceed a taxpayer’s income tax
liability. As a result, those with little or no
income tax liability, including many low-income
taxpayers, received little or no benefit from the
credit.
In combination, the ARPA changes wil increase
the maximum amount of the CDCTC from
$2,100 to $8,000, depending on expenses and
income.
The law al ows 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] will 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, temporarily increases the maximum
for Employer-
amount of qualifying child care expenses that
Provided Dependent
eligible taxpayers can exclude from their income
Care Assistance
from $5,000 to $10,500.
Part 5—Credits for Paid Sick and Family Leave
Payrol Credits
Extends the Families First Coronavirus Response
For background, see
Act (FFCRA; P.L. 116-127) employer payrol tax
CRS In Focus IF11739,
Payrol
credits for paid sick and paid family leave from
Tax Credit for COVID-19 Sick
March 31, 2021, through September 30, 2021.
and Family Leave, by Mol y F.
Prior to ARPA, FFCRA paid sick leave was
Sherlock.
limited to 10 days per employee. This provision
resets the 10-day limit, starting April 1, 2021, for
employers claiming the credit for paid sick leave
provided to their employees.
Expands the paid sick and paid family leave
credits to al ow credits for leave taken to obtain
immunization related to COVID-19 or recover
from any injury, disability, il ness, or condition
related to COVID-19 immunization.
Expands 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.
Prior to ARPA, the tax credit for family leave
wages was limited to $200 per day, and $10,000
Congressional Research Service
9
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
total per employee. This provision increases 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.
Adds a nondiscrimination rule to the paid leave
payrol tax credits, providing employers cannot
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.
Prior to ARPA, the paid sick and paid family leave
tax credits were 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
restructures 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
will not affect amounts transferred to the Federal
Hospital Insurance Trust Fund.
Prior to ARPA, government employers, including
state and local government employers, were not
al owed to claim paid leave payrol tax credits.
This provision provides that 501(c)(1)
organizations and 501(a) organizations can claim
the tax credits, making certain state and local
governments, as wel as 501(c)(1) federal
government instrumentalities, tax-credit eligible.
The 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 extends and expands
Tax Credit for COVID-19 Sick
the paid sick leave tax credits for self-employed
and Family Leave, by Mol y F.
individuals, similar to the modifications made for
Sherlock.
employers (described above).
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 extends and expands
Tax Credit for COVID-19 Sick
the paid family leave tax credits for self-employed
and Family Leave, by Mol y F.
individuals, similar to the modifications made for
Sherlock.
employers (described above). Tax credits can be
claimed for up to 60 days of family leave for self-
employed individuals.
Congressional Research Service
10
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
Part 6—Employee Retention Credit
Extension of
The employee retention and rehiring tax credit is
For background, see
Employee Retention
70% of qualified wages. The refundable payrol
CRS In Focus IF11721,
The
Credit
credit can be computed on up to $10,000 in
Employee Retention and
qualified wages paid to an eligible employee per
Employee Retention and Rehiring
calendar quarter. Prior to ARPA, the credit was
Tax Credits, by Mol y F.
available through June 30, 2021. Thus, the
Sherlock.
maximum credit amount for 2021 was $14,000
(70% of up to $20,000 in qualified wages paid
over the first two quarters).
Qualified wages depend on the number of
employees the employer had in 2019. For
employers with more than 500 ful -time
employees, qualified wages are wages paid when
employee services are not provided. For
employers with 500 or fewer ful -time
employees, al wages paid by eligible employers
are credit-eligible.
This provision extends the employee retention
credit through December 31, 2021. With this
extension, the maximum credit amount for 2021
is $28,000. A credit of up to $50,000 per
calendar quarter is also provided to recovery
startup businesses, defined as businesses
established after February 15, 2020, with average
annual gross receipts that do not exceed $1
mil ion. Severely financial y distressed employers,
those with gross receipts that are less than 10%
of what they were in the same calendar quarter
in 2019, are able to treat al wages as qualified
wages.
The credit is 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, temporarily expands
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, temporarily expands eligibility
Bernadette Fernandez.
by eliminating the current-law phaseout for
households with annual incomes above 400% of
the federal poverty level (FPL).
Regarding the formula, temporarily increases the
credit amount by reducing the percentage of
annual income that eligible households are
required to contribute toward the premium. The
temporary percentages range from 0.0% to 8.5%
of household income, with higher-income groups
subject to the larger percentages, as specified.
Congressional Research Service
11
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
Temporary
For 2020, temporarily provides tax relief to
Modification of
individuals who are subject to the current-law
Limitations on
requirement to pay back PTC amounts that were
Reconciliation of Tax
provided in excess. Temporarily suspends the
Credits for Coverage
recapture of excess credit amounts under the
Under a Qualified
current tax reconciliation process.
Health Plan with
Advance Payments of
Such Credit
Application of
For 2021, temporarily expands eligibility for and
For background, see
Premium Tax Credit
the amount of the PTC for certain individuals
CRS Report R45478,
in Case of Individuals
who receive unemployment compensation (UC).
Unemployment Insurance:
Receiving
Temporarily deems individuals who receive UC
Legislative Issues in the 116th
Unemployment
for any week in calendar year 2021 to have met
Congress, by Julie M. Whittaker
Compensation During
the PTC income eligibility criteria. Temporarily
and Katelin P. Isaacs.
2021
disregards 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).
Prior to ARPA, beginning in 2021, firms would
have been able to elect to include interest paid
by related foreign firms. This treatment is cal ed
worldwide al ocation. It would have been
beneficial for some firms because some of the
interest paid for foreign firms would be 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
was delayed by other legislation and was
scheduled to begin in 2021.
This provision repeals 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
extends this treatment (exclusion from income
Businesses: Issues and Policy
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.
Congressional Research Service
12
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
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
deductible, legislation specified that associated
CRS Report R46284,
COVID-19
expenses would be deductible. This provision
Relief Assistance to Smal
extends this treatment (exclusion from income
Businesses: Issues and Policy
and deduction of expenses) to additional grants
Options, by Robert Jay Dilger,
made from the new Restaurant Revitalization
Bruce R. Lindsay, and Sean
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). Prior to ARPA, a de minimus
reporting exception provided that third-party
settlement organizations were only required to
report transactions of payees who received more
than $20,000 and conducted more than 200
transactions per year. This provision modifies the
threshold for reporting, setting it at $600 per
year.
Modification of
Excludes from gross income qualifying student
For background, see
Treatment of Student
loans for postsecondary education discharged, for CRS Report R43571,
Federal
Loan Forgiveness
almost any reason, between December 31, 2020,
Student Loan Forgiveness and
and January 1, 2026. Qualifying student loans
Loan Repayment Programs,
include al federal student loans, and certain
coordinated by Alexandra
private education and institutional loans. Hence,
Hegji.
these amounts of discharged student loan debt
wil not be subject to taxation.
CRS Report R45931,
Federal
Student Loans Made Through the
Wil iam D. Ford Federal Direct
Loan Program: Terms and
Conditions for Borrowers, by
David P. Smole.
Source: CRS based on P.L. 117-2,
Title IX, Subtitle G.
a. For example, if a married couple has three children under 6 years old, the maximum credit they are eligible
for is $10,800 ($3,600 x 3) if their income is under $150,000. For taxpayers with income over $150,000, the
additional $4,800 of the credit ($1,600 x 3) phases down at a rate of 5%. At $246,000 of income, the credit
is $6,000 ($2,000 x 3), the current-law amount. The credit remains at this amount until the taxpayer’s
income reaches the existing threshold of $400,000. At that point, the credit phases out under the
provisions of current law (5% phaseout rate).
b. The law 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
13
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Table 2. American Rescue Plan Act of 2021 (ARPA; H.R. 1319): Title IX, Subtitle G—
Tax Provisions Related to “Promoting Economic Security” as passed the House of
Representatives February 27, 2021
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 Third Round of
2021, as opposed to 2022 (when 2021 income
“Stimulus Checks” in the
tax returns wil be filed). Amount and eligibility
American Rescue Plan Act of
for the advanced credit would general y be based
2021 (ARPA; P.L. 117-2), 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
IRS would be directed to issue a supplementary
the Third Round in the American
payment (a “top up”) within 90 days of the tax
Rescue Plan Act of 2021 (ARPA;
filing deadline or September 1, 2021, whichever
P.L. 117-2), by Margot L.
date is earlier.
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
Congressional Research Service
14
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
would stil receive a payment for a qualifying
dependent with an SSN.
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: Temporary Expansion
child for a young child and up to $3,000 for older
for 2021 Under the American
children by modifying several provisions of the
Rescue Plan Act of 2021 (ARPA;
existing credit. First, the bil would eliminate the
P.L. 117-2), by Margot L.
earned-income-based phase-in of the refundable
Crandal -Hol ick.
portion of the child credit (often referred to as
the “additional child credit” or ACTC) and
For background, see
eliminate the maximum amount of the ACTC
CRS Report R41873,
The Child
($1,400). Hence, the child credit would be “ful y
Tax Credit: How It Works and
refundable” and available to otherwise eligible
Who Receives It, by Margot L.
taxpayers with no earned income. Second, the
Crandal -Hol ick.
bil would increase the maximum age for an
CRS Report R46502,
The Child
eligible child to 17. Third, the bil would increase
Tax Credit: Selected Legislative
the maximum amount of the credit from $2,000
Proposals in the 116th Congress,
per child to $3,600 per child for a young child (0-
by Margot L. Crandal -Hol ick.
5 years old) and $3,000 per child for an older
Congressional Research Service
15
link to page 15
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
child (6-17 years old). This increase in the
maximum child credit of $1,600 per child for
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.
Congressional Research Service
16
link to page 15
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
The bil would create an online portal to al ow
taxpayers the options to opt out of receiving
advanced payments and to provide information
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.
The bil would al ow the Treasury to adjust
income tax withholding to accommodate these
advance payments.
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: Temporary
with no Qualifying
qualifying children by modifying the eligibility age
Expansion for 2021 under the
Children
and credit formula.
American Rescue Plan Act of
Regarding eligibility age, would expand eligibility
2021 (ARPA; P.L. 117-2), by
for the EITC for individuals with no qualifying
Margot L. Crandal -Hol ick.
children—sometimes referred to as the “childless
For background, see
EITC”—by reducing the minimum eligibility age
from 25 to 19 for most workers. In other words,
CRS Report R43805,
The
this change would al ow most eligible workers
Earned Income Tax Credit
ages 19 to 24 to claim the childless EITC. For
(EITC): How It Works and Who
students who are attending school at least part-
Receives It, by Margot L.
time, the age limit would be temporarily reduced
Crandal -Hol ick, Gene Falk,
from 25 to 2
4.b For former foster children and
and Conor F. Boyle.
youth who are homeless, the minimum age would
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
Congressional Research Service
17
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
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.
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
Congressional Research Service
18
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
increase the cap on qualifying expenses from
Crandal -Hol ick and Conor F.
$3,000 for one child and $6,000 for two or more
Boyle.
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
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
Congressional Research Service
19
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
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
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.
Congressional Research Service
20
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
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).
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). Qualified wages
depend on the number of employees the
employer had in 2019. For employers with more
than 500 ful -time employees, qualified wages are
wages paid when employee services are not
provided. For employers with 500 or fewer ful -
time employees, al wages paid by eligible
employers are credit-eligible.
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.
Congressional Research Service
21
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
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
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.
Congressional Research Service
22
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
Section Title
Description
CRS Resources
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
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
23
Table 3. Estimated Cost of Title IX, Subtitle G of the American Rescue Plan Act of 2021 (ARPA; P.L. 117-2)
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
393,714
16,918
-
-
-
-
-
-
-
-
-
410,632
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-24
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
4,506
1,747
(i )
(i )
(i )
(i )
(i )
-
-
-
-
6,253
Credits for Paid Sick and Family
Leave
Part 6—Employee Retention Credit
Extension and Modification of the
3,076
7,146
(i )
(i )
(i )
(i )
(i )
-
-
-
-
10,222
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-25
link to page 28 link to page 28
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
Modification of Treatment of
1
8
8
9
9
9
(i)
(i)
-
-
-
44
Student Loan Forgiveness
Total of Miscel aneous Provisions
-334
-1,415
-3,096 -3,026
-3,163
-3,154
-3,228
-3,298
-3,302
-3,290
-3,384
-30,690
Source: Joint Committee on Taxation, Estimated Revenue Effects Of H.R. 1319, The “American Rescue Plan Act Of 2021,” As Amended By The Senate, Scheduled for
Consideration by the House of Representatives, JCX-14-21, March 9, 2021, at https://www.jct.gov/publications/2021/jcx-14-21/.
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 by the Congressional Budget Office.
The estimate is not included in JCT’s estimate of the revenue effects.
CRS-26
Table 4. Estimated Cost of Title IX, Subtitle G of the American Rescue Plan Act of 2021 (ARPA; H.R. 1319) as passed the
House of Representatives February 27, 2021
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-27
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-28
link to page 28 link to page 28
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-29
The American Rescue Plan Act of 2021: Title IX, Subtitle G—Tax Provisions
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
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
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Congressional Research Service
R46680
· VERSION 10 · UPDATED
30