Here's What's in the Senate's $1.9T Relief Package

Although the bill extends federal unemployment payments through Sept. 5, and exempts the first $10,200 in benefits from income taxes, the Raymond James analysts continued, “additional funding provided to FEMA’s disaster relief fund could serve as a temporary backstop if unemployment support continues to be seen as necessary later this fall.”

Another “under the radar provision”: an exemption of student loan forgiveness from taxable income for four years, the Raymond James analysts said, “which may be laying the groundwork for federal student debt relief.”

Under the Senate bill, there’s also $15 billion in new funding for Economic Injury Disaster Loans (EIDL) as grants. Nonprofits and news services are allocated $7 billion in PPP funds, while $1 billion funds a grant program for independent live venues, theatres and cultural institutions, the Raymond James analysts point out.

EIDL grants, the analysts said, “are exempt from inclusion in recipients’ gross income for tax purposes.”

Other provisions of the American Rescue Plan, according to the Raymond James analysts, include:

Expansion of Earned Income Tax Credit

Maximum EITC raised to around $1,500 for childless workers and makes eligible 19- to 24-year-old workers as well as those over 65.

Education

The bill provides $130 billon for K-12 schools and $40 billion for colleges and universities. “A provision in the bill also specifies that any student loan forgiveness implemented between 2021-2025 is exempt from the classification of canceled debt as additional income for tax purposes, potentially a key step in expanded federal student debt relief.”

Child Tax Credit and Child and Dependent Care Tax Credit

The CTC is raised to $3,000 from $2,000 for children over 6 and $3,600 for children under 6 while expanding eligibility for the credit for 17-year-olds. The credit is made fully refundable, reaching homes without reported income.

State and Local Aid

The bill provides $350 billion for state and local government support. This includes $169 billion to allocate based on each state’s total share of unemployed workers, $25 billion to split evenly among states, $120 billion to allocate to cities and counties and $10 billion for states to expand remote work infrastructure (public health education, health monitoring services) via a Capital Projects Fund.

Health Care

The bill increases subsidies for those on Affordable Care Act plans, provides for 100% coverage of COBRA premiums for those who have become unemployed, and delays the removal of the Medicaid drug rebate cap for one year. The bill also provides significant levels of funding for COVID-19 testing and vaccines.

(Photo: Bloomberg)