Key Takeaways from the New Consolidated Appropriations Act of 2021
This is a brief overview of the latest COVID-19 aid package. Please give us a call for more information into the provisions most likely to affect you or your business in the near future. Contact your CPA at Hersman Serles Almond or our PPP team at 425-822-6557 for any further questions.
- Additional payments (called recovery rebates) of $600 to individuals making up to $75,000 per year and $1,200 per married couple filing jointly earning up to $150,000 per year (based on 2019 tax returns) — with payments phased out at $99,000 and $198,000 respectively — plus $600 per qualifying child.
- An additional $300 per week in unemployment benefits, including for the self-employed, gig-economy workers and others in nontraditional employment, through March 14, 2021, with the maximum period for state-paid benefits extended to 50 weeks.
- An extended eviction moratorium and federal rental assistance for families affected by COVID-19, applicable to past due rent, future rent payments, utility and energy bills.
- Clarification that money purchase pension plans are included among the retirement plans subject to temporary relief measures under the CARES Act (for example, waiver of penalties on COVID-19-related early distributions).
- Potentially larger earned income tax credits and child tax credits for some taxpayers.
- Loosened requirements for medical expense deductions beginning in 2021.
- Individual taxpayers can claim an "above-the-line" deduction of up to $300 for cash donations made to charity during 2020.
- An extended exclusion for certain employer payments of student loans.
- New rules for disaster-related distributions from retirement plans.
Businesses and other employers
- An extended and expanded retention tax credit for eligible employers that continue to pay employee wages during COVID-19 closures or after experiencing reduced revenue.
- New funding for first-time and so-called “second draw” forgivable loans to eligible businesses under the Paycheck Protection Program (PPP).
- Expanded PPP-eligible expenses (for example, certain operating expenses, property damage costs, supplier costs and worker protection expenses).
- Clarification of tax treatment for PPP loans, certain loan forgiveness and other financial assistance under COVID-19 legislation.
- New targeted Economic Injury Disaster Loan (EIDL) grants from the Small Business Administration (SBA) for businesses in low-income communities.
- Dedicated funding for live venues, independent movie theaters and cultural institutions.
- Extended tax credits for paid sick and family leave.
- Extended mandatory paid sick and family leave for qualifying COVID-19-related reasons.
- 100% business meals tax deduction for 2021 and 2022 for food purchased from restaurants.
- Enhanced Low Income Housing Tax Credit.
- Extended repayment period for deferred payroll taxes.
- Extended Work Opportunity Tax Credit, New Markets Tax Credit and Empowerment Zone tax incentives.