Coronavirus and Your Money

American Workers Get Enhanced Unemployment Benefits as Biden Signs Stimulus Package

The American Rescue Plan extends bonus payments of $300 per week and offers a tax break for unemployment benefits collected in 2020.

Millions of anxious, unemployed Americans are breathing a collective sigh of relief knowing that they will continue to receive – without interruption – supplemental weekly federal unemployment benefits into early September after President Joe Biden signed into law on Thursday the $1.9 trillion stimulus package known as the American Rescue Plan Act of 2021. 

Biden’s signature comes just days before the enhanced federal unemployment benefits, established by previous stimulus packages, were set to expire. As part of the new plan, nearly one-third of American households who are currently unemployed or will lose their job this summer will receive federal unemployment benefit payments of $300 per week – on top of standard benefit levels – through September 6, 2021. What’s more, as much as $10,200 of unemployment benefits received in 2020 will be exempt from tax for households whose incomes are less than $150,000. (Note: The IRS is working on 2020 tax form updates to account for the new exemption. If you already filed your 2020 tax return, don't rush to file an amended return – wait until the IRS issues instructions.)

The American Rescue Plan, which was finalized by the House on Wednesday in a firmly partisan 220-211 vote (with one Democrat voting no), is the latest iteration of federal health and economic aid to cushion the blows wrought by the novel coronavirus which, since March 2020, has significantly hobbled the American economy. 

The costs of the extended unemployment benefits represent about 13% of the package’s $1.9 trillion budget, which also includes a new round of stimulus checks, an enhanced child tax credit, relief for renters and more. The original version of the bill, approved by the House on February 27, provided federal unemployment benefit payouts of $400 a week through the end of September, but a bevy of last-minute compromises between conservatives and progressives on the Senate floor, in order to secure approval among all Democratic senators, ultimately shrank the payouts by $100 a week and cut the period of the payouts by three weeks. 

Democratic lawmakers assert that extending the timeline for providing the bonus federal unemployment benefits into early September will hopefully prevent millions of Americans from losing those benefits abruptly when the Senate is on summer recess. That's what happened last summer, causing millions of unemployed Americans to worry about making up for that supplemental income.

Most Popular

How Big of a Threat Does Inflation Pose to Your Retirement?
retirement

How Big of a Threat Does Inflation Pose to Your Retirement?

You might be surprised how much inflation can nibble away at your retirement nest egg over time if you aren’t prepared.
October 3, 2021
13 States That Tax Social Security Benefits
social security

13 States That Tax Social Security Benefits

You may have dreamed of a tax-free retirement, but if you live in these 13 states, your Social Security benefits are subject to a state tax. That's on…
October 4, 2021
4 Big Retirement Blunders (and How to Avoid Them)
retirement

4 Big Retirement Blunders (and How to Avoid Them)

It’s too bad, but financial advisers see these four mistakes all the time. Don’t fall into the same traps.
October 6, 2021

Recommended

Taxes on Unemployment Benefits: A State-by-State Guide
state tax

Taxes on Unemployment Benefits: A State-by-State Guide

Don't be surprised by an unexpected state tax bill on your unemployment benefits. Know where unemployment compensation is taxable and where it isn't.
October 19, 2021
Child Tax Credit Payments Sent October 15
Tax Breaks

Child Tax Credit Payments Sent October 15

The IRS sent another round of monthly child tax credit payments on October 15. Most families received their payment by direct deposit.
October 16, 2021
Child Tax Credit Payment Opt-Out Deadline is Today
Tax Breaks

Child Tax Credit Payment Opt-Out Deadline is Today

The October deadline for opting out of the monthly child credit payments has arrived. Use the IRS's Child Tax Credit Update Portal to unenroll.
October 4, 2021
New Platforms for a Comedy Couple
Coronavirus and Your Money

New Platforms for a Comedy Couple

COVID forced them to expand their stand-up repertoire to YouTube and podcasts.
September 30, 2021