$1.9 Trillion American Rescue Plan Tax Highlights



On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law. Some highlights...


Recovery Rebates

  • $1,400 per taxpayer and dependents

  • Income (AGI) limits:

  • Single up to $75k for full payout, phased out up to income of $80k

  • Head of Household up to $112,500 for full payout, phased out up to income of $120k

  • Joint up to $150k for full payout, phased out up to income of $160k

  • Payments are credits against 2021 taxes


Unemployment Relief

  • Additional weekly unemployment benefits of $300 per week until September 2021

  • First $10,200 of unemployment benefits exempt from 2020 federal tax for households with income (AGI) less than $150k


Child Tax Credit

  • Increased 2021 credit to $3k per child, $3,600 for children under six

  • Income (AGI) limits:

  • Single up to $75k for full payout, phased out up to income of $200k

  • Head of Household up to $112,500 for full payout, phased out up to income of $200k

  • Joint up to $150k for full payout, phased out up to income of $400k

  • Includes children up to 17-year-old

  • Advanced payments will be issued starting in July 2021, with remaining credit to be received on 2021 tax return (will be a website to opt out or update information)

  • Overpayments to be repaid on 2021 tax return for taxpayers with income (AGI) over:

  • Single $80k

  • Head of Household $100k

  • Joint $120k


Dependent Care Assistance

  • Increases 2021 credit from 35% to 50% of qualified expenses

  • Increased eligible expenses to $8k for one child and $16k for two or more

  • Maximum employer-provided dependent care benefits increased to $10,500 or $5,250 for MFS

  • Phased out for income (AGI) between $125k-$400k


Earned Income Tax Credit

  • Increased credit and income limits for filers without children

  • Can use 2019 or 2020 income to figure credit


Paid Sick and Family Leave Credits

  • Extended to September 30, 2021

  • Increased limit on wages to $10k from $12k

  • New 10-day period is available after March 31, 2021

  • Self-Employed days increased to 60 days from 50


Employee Retention Tax Credit

  • Extended through 2021


Premium Tax Credits

  • For 2021 and 2022 increases income level to qualify and credit amount

  • Advanced premiums available to those receiving unemployment

  • Income (AGI) limits of excess premium tax credits


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