As key provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act are set to expire, lawmakers introduced the $900 billion Consolidated Appropriations Act, 2021. Following last night’s Senate vote of 92-6, this coronavirus relief spending package is expected to soon be signed by President Trump. Key highlights of the bill include the following.

Paycheck Protection Program (PPP)

• Additional $284 billion in PPP funding
  • Businesses that already received PPP loans can receive a second (maximum amount of $2 million) if they have fewer than 300 employees & have seen drops of at least 25% of their revenue during the first, second, or third quarter of 2020 compared with the same quarter in 2019
  • Businesses that did not receive a PPP loan under the original program can apply if they have fewer than 500 employees
  • Expanded eligibility to Section 501(c)(6) non-profit organizations for the first time
• Provision allowing businesses to deduct expenses paid for with PPP funds
  • Qualifying expenses expanded to include covered property damage, supplier costs, or worker protection expenditures in addition to the expenses previously allowed by the CARES Act
• Businesses receiving a PPP loan will now be able to take the Employee Retention Tax Credit
• Simplified forgiveness process for loans under $150,000

Stimulus Payments

• $600 stimulus payments for most Americans (including $600 per child)
  • Phaseout from $75,000-$99,000 in income ($150,000-$198,000 for ‘married filing jointly’ (MFJ))

Employer/Employee Provisions

• Extension of the $300 addition to federal unemployment insurance benefit through March 14, 2021
• Extension of pandemic unemployment programs enacted by the CARES Act
• Added federal unemployment benefit of $100 weekly to those who earned at least $5,000 a year in self-employment income but otherwise disqualified from federal unemployment because they are eligible for state jobless aid
• Extension of employer tax credits for providing paid sick leave & paid FMLA leave as originally enacted by the Families First Coronavirus Response Act through March 21, 2021
• Allows FSA balances to be rolled from the 2020 tax year to 2021; 2021 balances can be rolled into 2022

Tax Provisions

• Deadline for employers to increase their employees’ withholding to pay back deferred payroll taxes extended to December 31, 2021 (previously April 30, 2021)
• Adjustment to the Earned Income Tax Credit (EITC) & Child Tax Credit (CTC) for families facing unemployment or reduced wages
  • Allows taxpayers to use their 2019 income for purposes of claiming the EITC & CTC if it results in a higher credit than 2020 income
• Extension & enhancement of the Employee Retention Tax Credit; increase in qualified wages for the fully refundable portion to 70%. – extended through July 1, 2021; also increases the limit on per-employee creditable wages to $10,000 per quarter rather than $10,000 per year (extended through July 1, 2021)
• 100% deductible business meals for 2021 & 2022
• Above the line charitable contribution deduction for those not itemizing deductions is extended through 2021 & increased to a maximum $600 deduction for MFJ taxpayers

Additional Program Enhancements

• $43.5 billion for continued SBA debt relief payments
• $20 billion for Economic Injury Disaster Loans
• $20 billion for small business grants
• $48 billion for vaccine distribution, COVID-19 testing, & contact tracing

Another round of relief legislation is expected to be introduced in January. KPM’s advisors continue to monitor this ongoing legislation and will provide updates as they occur.