Updated: Feb. 11, 2021
Originally Published: Feb. 11, 2021
The COVID-19 pandemic has not only claimed countless lives but has also highlighted the financial vulnerabilities faced by many American families, who are often just a few paychecks away from hardship. The ongoing economic fallout has impacted various sectors, from educators compelled to return to classrooms to retail workers struggling with job losses due to closures.
President Biden’s $1.9 trillion stimulus initiative, known as the American Rescue Plan, has raised questions regarding its benefits for families. Fortunately, the Institute on Taxation and Economic Policy (ITEP) has analyzed the data to clarify how much financial support American households can expect.
With direct payments of $1,400 and an expansion of the earned income and child tax credits, a significant portion of the stimulus package is designed to provide cash assistance to low- and middle-income families. Unlike earlier stimulus measures that primarily focused on businesses, this new plan represents a shift towards supporting households directly.
According to ITEP’s analysis, the potential impact of the stimulus package varies by income bracket. It’s important to note that these figures are averages—individual family benefits can differ.
- Families earning less than $21,300 annually (or about $10,900 per partner) can expect an average of $2,210 in cash payments, $1,060 in child tax credits, and $320 in earned income tax credits.
- Households with an average income of $30,500 may receive $2,460 in cash payments, $820 in child tax credits, and $60 in earned income tax credits.
- For families earning $51,500, the expected amounts are $2,690 in cash payments, $660 in child tax credits, and $20 in earned income tax credits.
As income levels rise, benefits decrease significantly. For instance, families earning $85,000 can anticipate a cash payment of $3,000, child tax credits of $620, and $10 in earned income tax credits. At the highest income tier of $1.8 million, the expected amounts drop to $40 in cash payments, $10 in child tax credits, and nothing for earned income tax credits.
These averages serve as a general guideline for how the Biden administration intends to distribute funds among the American populace. For more detailed insights, visit ITEP to explore their charts and understand the data behind these calculations.
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Summary:
The American Rescue Plan is set to provide financial relief to American families through direct payments and expanded tax credits. The benefits vary significantly based on income levels, with low- and middle-income households receiving more substantial support compared to higher earners. Understanding these figures can help families plan for their financial future amidst the ongoing challenges posed by the pandemic.