Summary of American Rescue Plan Act of 2021 (ARP Act) and how it could effect Local 49 members
US Congress summary
- extend unemployment benefits and related services.
- make up to $10,200 of 2020 unemployment compensation tax-free.
- make student loan forgiveness tax-free through 2025.
- provide a maximum recovery rebate of $1,400 per eligible individual.
- expand and otherwise modify certain tax credits, including the child tax credit and the earned income tax credit.
- provide premium assistance for certain health insurance coverage; and
- require coverage, without cost-sharing, of COVID-19 vaccines and treatment under Medicaid and the Children’s Health Insurance Program (CHIP).
Potential effect on Local 49 members
Direct Checks
- Provides another round of direct payments of $1,400 for individuals, $2,800 for joint filers, and $1,400 for each qualifying dependent. Eligibility based on income limits found on 2019 or 2020 tax returns.
- Dependents would include full-time students younger than 24 and adult dependents.
FFCRA sick leave
- FFCRA sick leave is extended from March 31, 2021 to September 30, 2021.
- FFCRA sick leave is still not federally mandated for employers to offer in 2021.
- Makes state and local governments eligible for the FFCRA paid leave reimbursable tax credit. Due to budget reconciliation rules the reimbursable tax credit will not be retroactive (for state and local governments) prior to FFCRA becoming law, and the effective date begins after March 31, 2021.
- The new law “refreshes” paid leave tax credit eligibility as of April 1, 2021 for providing FFCRA leave. As a result, an employer can voluntarily provide an additional 80 hours/10 days of paid sick leave, and an additional 10 weeks of paid family leave under the FFCRA beginning April 1, 2021 and are eligible for a tax credit for doing so. Again, providing this additional leave is not a requirement. The act increases the limit on the credit for paid family leave to $12,000.
- Adds absences related to other applicable FFCRA absences:
- The employee is seeking or awaiting the results of a diagnostic test or medical diagnosis for COVID-19, or their employer has requested such a test or diagnosis.
- The employee is obtaining immunization related to COVID-19.
- The employee is obtaining immunization related to COVID-19.
Unemployment
- Extends the Pandemic Unemployment Assistance program through Sep. 6, 2021, while increasing the total number of weeks of benefits available to individuals who are not able to return to work from 50 to 79 weeks and provides guidance to states on coordinating with other unemployment benefits when needed.
- Extends the Federal Pandemic Unemployment Compensation (FPUC) through Sep. 6, 2021, while maintaining the FPUC benefit amount of $300.
- Exempts the first $10,200 in 2020 unemployment benefits from federal income tax for households with incomes below $150,000 per year.
- Restores full reimbursement for state costs related to waiving the waiting week beginning Dec. 31, 2020 and continues it through Sep. 6, 2021.
- Increases the number of weeks of benefits an individual worker may receive in the Pandemic Emergency Unemployment Compensation (PEUC) program from 24 to 53 and extends the length of time in which workers can receive PEUC benefits if they exhaust regular state unemployment insurance benefits to last until Sep. 6, 2021.
PPP Loans
- Provides $7.25 billion for the Paycheck Protection Program (PPP) forgivable loans.
- With about half of the $284 billion in current funding available, the American Rescue Plan Act appropriates just $7.25 billion in additional funding and does not extend the PPP’s current application period, which is scheduled to close March 31.
- Makes more not-for-profits eligible for the PPP by creating a new category called “additional covered nonprofit entity,” which are those not-for-profits listed in Sec. 501(c) of the Internal Revenue Code other than 501(c)(3), 501(c)(4), 501(c)(6), or 501(c)(19) organizations, that can receive an initial PPP loan, provided that:
- The organization does not receive more than 15% of receipts from lobbying activities.
- The lobbying activities do not comprise more than 15% of activities.
Comments by League of Minnesota Cities on how funds can be used.
Unlike the Coronavirus Relief Funds authorized by the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Coronavirus Local Fiscal Recovery Funds can be used for the following purposes:
- Respond to or mitigate the public health emergency with respect to COVID-19 or its negative economic impacts.
- Cover costs incurred because of such emergency.
- Replace revenue that was lost, delayed, or decreased (as determined based on revenue projections for the metropolitan city, non-entitlement unit of local government, or county as of Jan. 27, 2020) because of such emergency.
- Address the negative economic impacts of such emergency.
