DC Tax Flash: Biden Proposes $1.9 Trillion Relief Plan

Tax Alert
01.14.2021

President-elect Joe Biden is proposing a nearly $2 trillion virus relief package that he will present to the country this evening. The plan includes $1,400 relief payments to individuals, reinstating the now-expired mandatory leave provisions enacted in the Family First Coronavirus Relief Act (FFCRA) and several tax relief proposals directed at child care and lower-income individuals.

Biden's proposal notes that it will expand eligibility for the $1,400 payments to "adult dependents who have been left out of previous rounds of relief and all mixed status households."

On mandatory leave, the Biden plan explains that it would:

  • Put the requirement back in place and eliminate exemptions for employers with more than 500 and less than 50 employees. He will also make it clear that healthcare workers and first responders get these benefits, too. Closing these loopholes in the Families First Coronavirus Response Act will extend emergency paid leave to up to 106 million additional workers.
  • Provide expanded paid sick and family and medical leave. The president-elect will provide over 14 weeks of paid sick and family and medical leave to help parents with additional caregiving responsibilities when a child or loved one’s school or care center is closed; for people who have or are caring for people with COVID-19 symptoms, or who are quarantining due to exposure; and for people needing to take time to get the vaccine.
  • Expand emergency paid leave to include federal workers. This measure will provide paid leave protections to approximately 2 million Americans who work for the federal government.
  • Provide a maximum paid leave benefit of $1,400 per-week for eligible workers. This will provide full wage replacement to workers earning up to $73,000 annually, more than three-quarters of all workers.
  • Reimburse employers with less than 500 employees for the cost of this leave. Extending the refundable tax credit will reimburse employers for 100 percent of the cost of this leave.
  • Reimburse state and local government for the cost of this leave.
  • Extend emergency paid leave measures until September 30, 2021.

On child care, the plan would expand tax credits for one year. "Families will get back as a tax credit as much as half of their spending on child care for children under age 13, so that they can receive a total of up to $4,000 for one child or $8,000 for two or more children," according to the proposal. "The tax credit will be refundable, meaning that families who don’t owe a lot in taxes will still benefit. The full 50 percent reimbursement will be available to families making less than $125,000 a year. And, all families making between $125,000 and $400,000 will receive a partial credit so they receive benefits at least as generous as those they can receive today."

The plan also calls for making the Child Tax Credit fully refundable for the year. "Currently, 27 million children live in families with household incomes low enough that they didn’t qualify for the full value of the Child Tax Credit, and this measure would give these children and their families additional needed resources," the plan states. "The president-elect is also calling to increase the credit to $3,000 per child ($3,600 for a child under age 6) and make 17 year-olds qualifying children for the year."

The Biden proposal also aims to expand the Earned Income Tax Credit for the year. It would "raise the maximum Earned Income Tax Credit for childless adults from roughly $530 to close to $1,500, raise the income limit for the credit from about $16,000 to about $21,000, and expand the age range that is eligible including by eliminating the age cap for older workers so that older workers can claim the credit they deserve."

A 19-page fact sheet on the Biden virus relief plan is posted here.

House Speaker Nancy Pelosi (D-CA) and Senate Democratic Leader Chuck Schumer (D-NY) endorsed the plan in a statement posted here.


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