As Joe Biden takes office on Jan. 20, 2021, his team’s proposed American Rescue Plan would cut taxes for some and provide aid to state, local, and tribal governments. The proposed $1.9 trillion stimulus plan includes a number of changes to tax provisions that might be an interest to tax professionals.
- Economic impact payments: The plan includes $1,400 stimulus checks for those who are eligible. These payments are on top of the $600 payments authorized by Congress in December.
- Unemployment: Biden is calling Congress to increase supplemental unemployment insurance to $400 per week through September 2021.
- Child tax credit: The plan would raise the child tax credit (CTC) to $3,000 per child and make it fully refundable for 2021. Additionally, the credit would be raised to $3,600 for a child under 6 years old, and 17-year-olds will be eligible.
- EIC: The earned income credit (EIC) would be expanded, raising the maximum amount for workers without children to approximately $1,500 (from $538 for the 2020 tax year; $543 for the 2021 tax year) and raising the income cap for those eligible to approximately $21,000 from $16,000.
- Child and dependent care tax credit (CDCTC): Biden’s plan would temporarily expand a tax credit for child care so families will get money back as a credit for children younger than 13 - $4,000 for one child and $8,000 for two or more children. This credit would begin to phase out at a family AGI of $125,001, with a complete phaseout at $400,001.
NATP will continue to provide updates if the proposal becomes legislation.
About National Association of Tax ProfessionalsThe National Association of Tax Professionals (NATP) is the largest association dedicated to equipping tax professionals with the resources, connections and education they need to provide the highest level of service to their clients. NATP is comprised of over 23,000 leading tax professionals who believe in a superior standard of ethics and exemplify professional excellence. Members rely on NATP to deliver professional connections, content expertise and advocacy that provides them with the support they need to best serve their clients. The organization welcomes all tax professionals in their quest to continually meet the needs of the public, no matter where they are in their careers.
The NATP headquarters is located in Appleton, WI. To learn more, visit www.natptax.com.
Information included in this article is accurate as of the publish date. This post is not reflective of tax law changes or IRS guidance that may have occurred after the date of publishing. All taxpayer circumstances are different, and NATP recommends contacting research services if you have specific questions about your clients’ tax situations.