The U.S. Department of the Treasury (Treasury Department) is responsible for administering over $1 trillion of American Rescue Plan (2021) funds and established the Office of Recovery Programs to serve as “one point of entry for grantees.”
According to a fact sheet released by the Treasury Department, ARP is “one of the most progressive pieces of legislation in history and will build a bridge to an equitable economic recovery.”
Grants Works is summarizing planned allocations of ARP funding as outlined in a fact sheet published by the Treasury Department on March 18, 2021. To view actual expenditures, visit PandemicOversight.gov or USASpending.gov.
Economic Impact Payments
The ARP authorized a third round of more than $242 billion in Economic Impact Payments (EIP) to eligible Americans. The first two rounds were authorized through the CARES Act signed on March 27, 2020, and the Consolidated Appropriations Act signed on December 27, 2020.
For EIPs authorized by the ARP, the Treasury Department teamed up with the Internal Revenue Service (IRS) to extend payments of up to $1,400 to each eligible individual, $2,800 for married couples, plus an additional $1,400 for each dependent. In addition, the Treasury Department and IRS expanded its outreach to homeless shelters and legal aid clinics to ensure millions of homeless persons, rural poor and other disadvantaged Americans received EIPs.
Employee Retention and Paid Leave Credit Programs
In addition to the direct infusion of capital for small businesses around the country through the SSBCI, the ARP extends tax credits to small businesses through December 2021 that experienced reduced revenues or were temporarily shuttered. The tax credits are to be used to help offset payroll tax liabilities by up to $7,000 per employee per quarter throughout 2021 at a maximum of $28,000 per employee throughout the year.
The plan also extends paid leave credits of up $5,000 per employee through September 2021 for small and medium-sized businesses that offer paid leave to employees who used the leave due to illness or the need to quarantine.
Unemployment Compensation
For the millions of Americans who claimed unemployment benefits in 2020, the ARP waives federal tax on the first $10,200 of unemployment benefits received by low- and middle-income beneficiaries. This waiver applies to unemployment benefits disbursed through federal unemployment programs as well as those from state unemployment insurance.
If you want to learn more about ARP, you can access the full law (Public Law 117-2), read a detailed breakdown prepared by the National Council of State Legislatures, and read the Treasury Department’s ARP fact sheet.
Access on demand training about federal grants with the Federal Grants Simplified Membership
Child Tax Credit
ARP expanded the Child Tax Credit by increasing the credit amount from $2,000 to $3,600 for children under 6 years old and $3,000 for children under 18. The tax credit was made through advance payments to individuals eligible for the 2021 Child Tax Credit. The advance payments will be made periodically from July 1, 2021 to December 31, 2021.
Other changes included: (a) expanding the credit scope to children under 17 years old instead of children on 16 years old; (b) making the Child Tax Credit fully refundable, and (c) expanding eligibility to families in Puerto Rico and U.S. territories. The ARP also required the IRS to build an online portal for taxpayers to update relevant data for any mid-year payments (e.g., the birth of a child).
State and Local Fiscal Recovery Fund
It is no surprise that with the contracted economy that state and local revenues fell. Despite falling revenues and massive layoff of educators and other public sector employees, state and local governments set up emergency medical facilities and vaccination sites to meet the needs of millions of Americans during an unprecedented public health crisis.
To address the gap in revenue and shore up “on the ground” services, ARP allocates $350 billion in emergency funding directly to each eligible state, county, city, territorial, and Tribal government and to non-entitlement units of local government. This $350 billion is in addition to the $150 billion state and local governments received from the CARES Act in March 2020. A breakdown of the $350 billion is below.
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- States and District of Columbia = $195.3 billion
- Counties = $65.1 billion
- Cities and other non-entitlement units of local government = $65.1 billion
- Tribal governments = $20 billion
- Territories = $4.5 billion
The Treasury Department provided guidance on the eligible uses of the funding and released a range of resources such as detailed eligibility criteria and a portal to request funds, a fact sheet, a list of FAQs (last updated July 19, 2021), an Interim Final Rule to help implement the provisions of the program, compliance and reporting guidance, and a summary of the process to finalize the Interim Final Rule.
Funds distributed to counties were based on the county’s share of the US population and counties that currently receive Community Development Block Grant (CDBG) funding will receive the larger of either the population-based share or an amount determined by a modified CDBG allocation model.
Read Grants Works’ post on SLFRF to find out more about the eligible uses of these funds and for several examples of how some state and local governments are using the funding.
Access on demand training about federal grants with the Federal Grants Simplified Membership
Capital Projects Fund
The ARP provides $10 billion to state, territories and Tribal governments to cover the costs of capital projects such as broadband infrastructure.
Homeowner Assistance Fund
Another $10 billion in funding was provided to states, territories and tribes to provide immediate relief to the estimated 10 percent of homeowners who were behind on mortgage payments. This breakdown included a minimum of $50 million to each state, $30 million for U.S. territories such as Guam, American Samoa, and the U.S. Virgin Islands. The law also included a mandate that socially disadvantaged households are to be prioritized. Eligible use of funds included payment of delinquent mortgage payments.
Emergency Rental Assistance
$21.6 billion in funding was provided to states, territories and local governments to assist people who are unable to pay rent and utilities due to the COVID-19 pandemic. This is in addition to the $25 billion in federal funding provided to states and local governments in December 2020 for the same purpose. The $21.6 billion in ARP funding was designed to leverage existing local programs to ensure the funds are disbursed to those in need as quickly as possible.
State Small Business Credit Initiative
In an effort to stem the devastation experienced by many small businesses around the country, the ARP provides $10 billion to state and Tribal governments to fund small business credit expansion initiatives through the State Small Business Credit Initiative (SSBCI).
Using a model developed in 2011 under the Obama-Biden administration, the initiative will provide:
- $1.5 billion to states for businesses owned by socially and economically marginalized people
- A $1 billion incentive for states that demonstrate they are making inroads in this initiative
- $500 million to support very small businesses with fewer that 10 employees.
Employee Retention and Paid Leave Credit Programs
In addition to the direct infusion of capital for small businesses around the country through the SSBCI, the ARP extends tax credits to small businesses through December 2021 that experienced reduced revenues or were temporarily shuttered. The tax credits are to be used to help offset payroll tax liabilities by up to $7,000 per employee per quarter throughout 2021 at a maximum of $28,000 per employee throughout the year.
The plan also extends paid leave credits of up $5,000 per employee through September 2021 for small and medium-sized businesses that offer paid leave to employees who used the leave due to illness or the need to quarantine.
Unemployment Compensation
For the millions of Americans who claimed unemployment benefits in 2020, the ARP waives federal tax on the first $10,200 of unemployment benefits received by low- and middle-income beneficiaries. This waiver applies to unemployment benefits disbursed through federal unemployment programs as well as those from state unemployment insurance.
If you want to learn more about ARP, you can access the full law (Public Law 117-2), read a detailed breakdown prepared by the National Council of State Legislatures, and read the Treasury Department’s ARP fact sheet.
