Senate Passes Pandemic Relief Bill, With Some Notable Tax Changes

Chris Gaetano
Published Date:
Mar 8, 2021

The Senate over the weekend passed the $1.9 trillion pandemic relief bill in a 50-49 party line vote, despite previous efforts to create a bipartisan aid package, according to NBC News.

The bill, according to the New York Times and CPA Practice Advisor, contains some key differences from the House of Representatives version, which passed last month. Because the Senate version is different, the House will need to approve the final version; the Times said that it is expected to do so Tuesday, and then the bill would go to President Biden for his signature.

Like the House version, the Senate legislation contains a federal supplement to weekly unemployment benefits, though it is $300, not $400. The Senate would also extend the period in which one can collect these benefits by one month. And it would allow the first $10,200 to be nontaxable for households with incomes up to $150,000. Another change applies to the child tax credit. This year, the bill would temporarily expand this credit—currently worth up to $2,000 per child under 17to up to $3,600 for children up to age 5 and up to $3,000 for children 6 to 17.

The Senate version also contains a provision that would exempt student loan forgiveness from income taxes through 2025.

As was previously expected, the bill does not include a minimum wage increase to $15, or really any minimum wage increase at all, due to the Senate parliamentarian saying doing so would break the rules allowing Democrats to pass the bill with a simple majority. While some had tried to restore it to the bill, the procedural vote failed 42-58, with seven Democrats defecting from their own party to defeat the measure. The Senate version also drops a rail project that the House version had funded.

As the result of a compromise, fewer people would receive $1,400 direct payments, an outcome that  was anticipated earlier. The income threshold would remain $75,000 a year, but the drop-off point would be much steeper, to the point where those making $80,000 or more would get nothing at all.

The legislation also contains $160 billion for vaccine and testing programs; $360 billion in aid for state, local and territorial governments, including $10 billion that Senate Majority Leader Chuck Schumer (D-N.Y.) added in the final moments before the bill passed; paid-leave benefits of as much as $1,400 per week and tax credits for employers with fewer than 500 employees to reimburse them for the cost of the sick time; $170 billion for schools; an extension of the foreclosure and eviction moratoria through September, along with $50 billion in rental assistance and emergency housing funds; and about $47 billion for various small business aid programs, including more money for the Paycheck Protection Program (PPP).

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