5 Ways the $1.9 Trillion American Rescue Plan May Affect Your Finances

The American Rescue Plan Act was signed into law on March 11. Here’s what Connecticut residents need to know.

Direct Payments

If you are single and make less than $75,000, you will receive $1,400 from the federal government. That payment will phase out up at $80,000. If you are single and make more than $80,000 you are ineligible.

Married couples making less than $150,000 will receive a full payment of $2,800, plus an additional $1,400 for each dependent child. Couples with a combined income of between $150,000 and $160,000 will receive a fraction of the payment. Those who make over $160,000 are not eligible. 

The Congressional Research Service estimates that about 1.56 million Connecticut residents are eligible for direct payments. 

Child Tax Credit 

The plan increases the federal child tax credit from $2,000 to $3,600 for each child under the age of 6 and $3,000 for children between the ages of 6 and 17. 

Single heads of household who make less than $112,500 and married couples who make up to $150,000 will receive the entire credit. Households earning more than these thresholds will see a decrease of $50 for every $1,000 above the threshold amount. The increased payments will lapse after 2021. 

According to data from the Center on Budget and Policy Priorities, a research, policy and lobbyist group that focuses on the federal budget, an estimated 608,000 children in Connecticut would benefit from the expansion in the Child Tax Credit, including 79,000 who would be lifted either above or closer to the poverty line. About half of the child beneficiaries are white, a quarter are Latino and an eighth are Black. 

Earned Income Tax Credit 

Workers without children who make up to $21,000 are now eligible for the Earned Income Tax Credit, which has been increased from a maximum of about $530 to $1,500. 

The plan also lowers the minimum eligibility age from 25 to 19 years old for non-students, and eliminates the maximum age. 

Nationally, a third of all cashiers, one in every five retail workers and one in four childcare workers would benefit from these changes. 

In Connecticut, 154,000 workers would benefit — 61 percent of whom are white, 18 percent Latino and 14 percent Black, according to estimates from the Center on Budget and Policy Priorities. 

Unemployment Benefits 

If you’ve been out of work for the past year, you’ve probably wrestled with an alphabet soup of acronyms. Two pandemic-specific programs are Pandemic Extended Unemployment Compensation (for workers who exhausted their state unemployment benefits), and Pandemic Unemployment Assistance (for workers who were ineligible for state benefits — for example, self-employed, part-time workers, and those unable to work because of COVID). 

According to the U.S. Department of Labor, about 92,000 Connecticut residents are currently relying on one of these two programs. 

The American Rescue Plan extends these two programs until September 6, 2021. It also extends Federal Pandemic Unemployment Compensation, which are additional payments of $300 per week to individuals receiving unemployment. 

Health Insurance

Tax credits for health insurance premiums are significantly expanded under the plan for the years 2021 and 2022. Under this plan, people who make 150 percent of the poverty level or less — which translates into $19,000 or less for a single person and $39,000 or less for a family of four — will pay no premiums. 

For everyone else, premiums are capped at 8.5 percent of a person’s income — a decrease from the 9.83 percent limit currently in place for people with incomes between 300 and 400 percent of the poverty level. 

For people receiving insurance through COBRA, the bill would also cover 85 percent of the premium costs. Additionally, low and moderate-income individuals would not have to pay back premium tax credits they received during the year 2020. 

Estimates from the Center on Budget and Policy Priorities show that a 60-year-old couple in Connecticut who make $75,000 would pay $531 in monthly premiums — a decrease of $1,932 from current law. A family of four making $120,000 would pay $850 in premiums — a decrease of $1,004. 

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