Democrats in the House passed President Joe Biden’s $1.9 trillion COVID-19 stimulus package last week, which contains a handful of significant tax changes.
The bill now heads to the Senate, where it will need a simple, 51-vote majority to advance under the budget reconciliation process. Senate leaders have been working with the House to incorporate Senate priorities and are planning to take the bill directly to the floor, bypassing the relevant committees.
Key tax provisions for businesses include:
- Extending the sick pay and paid family leave credits provided by the Families First Coronavirus Relief Act through Sept. 30
- Repealing the election to allocate interest on a worldwide basis, which goes into effect for tax years beginning after Dec. 31, 2020
- Extending the employee retention credit through 2021, but restructuring it as a payroll tax credit against Medicare tax after June 30
- Exempting Economic Injury Disaster Loan and Restaurant Revitalization grants from tax
The bill also provides $1,400 stimulus checks for each filing taxpayer and dependent and makes enhancements to the Child Tax Credit, Earned Income Tax Credit and the Child and Dependent Care Tax Credit for 2021.
Major changes are not expected in the Senate but remain possible. With moderate Republicans signaling that they are unlikely to support the package, Democrats will likely need complete unanimity. However, there are some disagreements among Democrats over on non-tax aspects of the package that may have to be resolved.
Senate Majority Leader Chuck Schumer (D-NY) has indicated he hopes to have the bill on President Biden’s desk by March 14.
Dustin Stamper is a managing director in Grant Thornton’s Washington National Tax Office and leads the tax legislative affairs practice for the firm.
Washington DC, Washington DC
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