New Stimulus Offers More Slack
More help is on the way. And it is not just another check.
We could all use some extra financial slack right now and more help is on the way. The latest COVID-19 relief package signed by President Biden has more than stimulus checks to help us out during this difficult time. Here we’ll take a look at the pieces of the bill that will most impact our ability to build and maintain financial slack.$1,400 stimulus checks
Similar to the last two stimulus payments, these payments will go to those making up to $75,000 for individuals, $112,500 for heads of household and $150,000 for married couples filing jointly and will be reduced for those with income above these thresholds. The main difference this time is that dependents of all ages are eligible for the payments. Previously, you would only receive money for dependents under the age of 17.Now is the time to start planning for the best way you should use your payment based on your most urgent financial priorities since they will begin arriving in bank accounts this month. Check out our previous post Stimulus Checks Are Back for our recommendations to help you prioritize how to use it.
Child tax credit increases
Speaking of dependents, for 2021 the Child Tax Credit will be expanded. The tax credit will be $3,600 for children up to 6 years old, or $3,000 for children ages 6 to 17. This is an increase compared with its current limit of $2,000 for many families. In addition to the increase, the bill will also change how we receive the credit. Instead of waiting for our annual tax refund, the IRS will send out payments monthly based on families’ income the previous year.Giving some of us just a bit more financial slack, the bill will also expand the child and dependent care tax credit for 2021.
Continued boost to unemployment benefits
If you lost your job during the pandemic, there is some good news about your unemployment benefits. The $300 per week boost has been extended through early September. In addition, federal income taxes will be waived for the first $10,200 of unemployment benefits received in 2020 for households earning up to $150,000.Health insurance support
Insurance plays an important role in helping us maintain our financial slack and this bill makes it easier for us to get. The bill temporarily increases subsidies for those of us purchasing health insurance through the Affordable Care Act’s marketplaces, including billions of dollars for public health programs and veterans’ health care.There is also more support for you if you’ve lost your job. If you have maintained health insurance through your former employer via COBRA, you will be able to continue to do so through September with the full cost of premiums covered.
Other financial slack boosters
- Those of us without children will see an expansion of the earned-income tax credit in 2021.
- Through 2025, it will exempt student loan forgiveness from income taxes.