The massive COVID-19 relief bill approved by Congress includes an increase in tax breaks for families.
The legislation is expected to be signed by President Biden by the end of this week.
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Tax breaks for households with and without kids
Under current law, most taxpayers can reduce their federal income tax bill by up to $2,000 per child. In a significant change, the bill would increase the tax break to $3,000 for every child age 6 to 17 and $3,600 for every child under the age of 6.
The legislation also calls for the payments to be delivered monthly instead of in a lump sum. If the secretary of the Treasury determines that isn’t feasible, then the payments are to be made as frequently as possible.
Families would get the full credit regardless of how little they make in a year, leading to criticism that the changes would serve as a disincentive to work. Add in the $1,400 checks and other items in the proposal, and the legislation would reduce the number of children living in poverty by more than half, according to the Center on Poverty and Social Policy at Columbia University.
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The bill also significantly expands the Earned Income Tax Credit for 2021 by making it available to people without children. The credit for low and moderate-income adults would be worth $543 to $1,502, depending on income and filing status.
Unemployment aid
Expanded unemployment benefits from the federal government would be extended through Sept. 6 at $300 a week. That’s on top of what beneficiaries are getting through their state unemployment insurance program. The first $10,200 of jobless benefits would be non-taxable for households with incomes under $150,000.
Additionally, the measures provide a 100% subsidy of COBRA health insurance premiums to ensure that the laid-off workers can remain on their employer health plans at no cost through the end of September.
More: Congress approves COVID bill: When to expect $1,400 stimulus checks