What families need to know about the American Rescue Plan
You’ve no doubt heard about a new COVID-19 relief plan that is currently being considered in Congress. It’s being called the American Rescue Plan, and you’re probably wondering what’s in it and if it will affect you.
We want to help keep you informed, so please continue to visit this page as we will update it as we find out more information about the details in the bill. For now, here are the items within the American Rescue Plan that may impact your family. Keep in mind that this bill has passed the House of Representatives, but could change significantly as the Senate considers it.
A third round of stimulus checks
The CARES Act provided up to $1,200 to most Americans and another payment of up to $600 was recently sent as a result of the Continuing Appropriations Act. The American Rescue plan currently calls for a third direct payment of up to $1,400 and another $1,400 for each dependent you have.
An increase to the Child Tax Credit
This tax credit is given to families to help offset the cost of having children. It’s currently up to $2,000 per child, but the American Rescue Plan would raise the credit to $3,000 per child ($3,600 if your child is under six years old). Additionally, half of the Child Tax Credit would be given in advance via monthly payments directly to families. The age limit for qualifying children would also be raised from 16 to 17 years old.
A boost to the federal minimum wage
Currently, minimum wage on the federal level is $7.25 per hour. Although many states, counties and municipalities have higher minimum wage rates, 31 states currently follow the federal minimum wage. The American Rescue Plan would raise minimum wage to $9.50 per hour and continue to raise it annually over several consecutive years.
An increase to the Child and Dependent Care Tax Credit
This tax credit is taken by families with child care and senior care expenses. This can include hiring a nanny, paying for in-home senior care and sending kids to day care or summer day camps. The American Rescue Plan will increase the amount of expenses that can be applied to the Child and Dependent Care Tax Credit from $3,000 to $8,000 if you have one child, and from $6,000 to $16,000 if you have two or more children. Since you can apply more expenses to the credit, you’ll be able to save more money when you file your taxes.
A bump in savings from a Dependent Care Account
This type of flexible spending account can be used to pay for many of the same care expenses just described in the Child and Dependent Care Tax Credit tax-free. This creates a large amount of tax savings annually for families. Currently, there is a $5,000 limit for a Dependent Care Account each year, but the American Rescue Plan would increase this amount to $10,500.
An extension in paid sick leave and paid family leave credits
The Families First Act gave caregivers the ability to take paid sick leave or paid family leave for various reasons related to COVID-19. If this occurred, the families who employ them would get tax credits to cover the wages they paid to their caregiver while they were out of work. These credits are set to expire at the end of March but would be extended through September 30 by the American Rescue Plan.
We hope this information gives you a better understanding of what is in the American Rescue Plan to date. Please share this information with others who may have questions and check back for updates on this page in the coming weeks.
Are you a nanny, senior care worker or other type of caregiver? Here's how the American Rescue Plan may impact caregivers.
Leave a comment
Create a free account with Care.com and join our community today.