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.
Bidens 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. Whats 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.
The American Rescue Plan, which was finalized by the House on Wednesday in a firmly partisan 220-211 vote , is the latest iteration of federal health and economic aid to cushion the blows wrought by the which, since March 2020, has significantly hobbled the American economy.
Moderates To Be Cajoled Into Supporting Both Bills
With votes looming at the start of next week, Democrats are on a mission to get the support from both wings of their party to pass their agenda.
John Podesta, former chief of staff to President Clinton, has written a letter to Democrats to urge them to come together.
“It’s time for the Democrats… to deliver Democracy.”
Democrats Criticize Reynolds’ Comment That Safety Net ‘has Become A Hammock’
Reynolds in her Condition of the State address in January said the cuts to unemployment are part of a series of changes she wants to make to address Iowa’s worker shortage and pair Iowans with jobs. She said she believes government unemployment benefits have discouraged people from working, and “the safety net has become a hammock.”
“When we have more jobs available than we have people on unemployment, we need to take a look at a system that was put in place during a much, much different time in our history,” Reynolds told reporters last week.
Democrats and labor groups have said the benefits aren’t the problem, and that the proposal would hurt workers who lose their jobs through no fault of their own. Workers fired for cause are not eligible for unemployment.
“This is the governors proposal and the premise of this is that Iowa workers are lazy,” said Rep. Bruce Hunter, D-Des Moines. “We as Democrats could not disagree more with that statement.”
Iowa’s unemployment rate in January the most recent month with data available was at 3.7%. There were about 20,300 Iowans filing continued unemployment claims in the week ending March 12, according to Iowa Workforce Development data. Iowans received an average weekly benefit of about $344, replacing about 46% of the wages they earned in their prior job.
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Congress Returns To Unfinished Business
Posted: Jun 07, 2010 · Congress returns this week from its one-week Memorial Day recess with the Senate ready to take up the House-passed extenders bill, while the House determines their next move on the FY10 supplemental bill. … including authority for long-term unemployment benefits and provisions preventing a scheduled 21 percent cut in Medicare …
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The razor-thin margin of error meant that a handful of moderate Democrats and Sen. Joe Manchin of West Virginia in particular were able to obtain several concessions. The original plan of sending out checks of up to $2,000 to most Americans was reduced to checks of up to $1,400. The income cap was also lowered people making under $75,000 will receive the full amount, but anyone making over $80,000 will get nothing at all.
Voting on the bill started Friday morning but was held up for many hours as Manchin threatened to support a Republican amendment to severely curtail unemployment benefits. In the end, Democrats agreed to water down their bill to keep Manchin from voting for even sharper cuts. The bill originally paid out $400 per week in unemployment benefits until early October. This was shortened to $300 per week through Sept. 6. If nothing were passed, existing federal unemployment benefits would expire this month.
A previous version of the bill passed by the House would have gradually raised the federal minimum wage to $15 per hour over five years. That proposal was ruled out of order in the Senate. An attempt by Sen. Bernie Sanders of Vermont to add the minimum wage hike back into the bill failed Friday in a vote of 4258, with eight Democrats voting against it.
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Congress Passes Payroll Tax Cut And Unemployment
Posted: Feb 17, 2012 · Congress passed legislation Friday extending the payroll tax cut, unemployment benefits, and the doc fix for Medicare physician reimbursements through the remainder of the year. The House approved the measure by a vote of 239-132, while the Senate quickly passed the legislation by a 60-36 vote, ahead of a congressional recess that starts …
Will The Unemployment Money I Receive During The Pandemic Eventually Be Taxed
By law, unemployment payments are taxable and must be reported on your federal tax return, according to the IRS. This includes the special unemployment compensation authorized under the COVID-19 relief bills. These tax bills can range from several hundred to several thousand dollars — a major burden for those who have been out of work, many of whom did not know the benefits would be taxed, The Washington Post reported.
However, with the new stimulus bill, up to $10,200 in last year’s unemployment payments can be exempt from taxes if your adjusted gross income is less than $150,000, according to new exclusions from the IRS. If your AGI is higher, you can’t exclude any unemployment compensation.
There are other implications, too. For one, it’s retroactive: You could get the tax break for any unemployment collected in 2020, but not in 2021. For another, tax season has already started, and millions of people have filed returns already. If you collected unemployment and have already filed your taxes, the IRS is urging you not to file an amended return and will provide you will additional guidance.
According to the White House, the addition of the tax break will provide more relief to the unemployed than the previous legislation did. However, according to tax experts, it really depends on your specific situation .
Typically, your unemployment benefits do get taxed. But the new stimulus bill changes that.
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Is There Forbearance And Foreclosure Relief
In February, the Biden administration extended forbearance and foreclosure relief programs on federally backed mortgages. It extended the ban on foreclosures through June and allowed homeowners to enroll in mortgage payment forbearance programs through then. Mortgages owned by private lenders arent included in the relief.
Job Growth Slows In August But Unemployment Rate Falls To 52 Percent
Some states dropped out of the federal programs earlier this summer to incentivize workers to find jobs. But an estimated 5.4 million gig workers, contractors, and others not covered by traditional unemployment insurance are no longer covered, and 3.9 million on extended benefits are also out.
Now comes the evidence portion of several theories. Were the extended benefits keeping people from a serious job search, as some economists contend? Did the Covid-19 surge intimidate potential workers from seeking a job? And what jobs will be available in an economy that is still recovering from the pandemic, which saw a number of businesses permanently close and/or reduce work forces to accommodate the new levels of spending by consumers?
Meanwhile, traders will be watching for new inflation data at the producer level. The Labor Departments Producer Price Index comes out on Friday, updating the state of inflation in the US at the producer level. It will provide a clue as to whether supply chain constraints and materials shortages have continued to push prices higher.
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House Passes Bill That Could Limit Unemployment Benefits
JEFFERSON CITY Under a bill passed by the Missouri House on Thursday, unemployed residents could be limited to receiving benefits for as little as eight weeks.
The amount of time an insured worker can receive unemployment is determined by the average unemployment rate in the state. As the average unemployment rate goes down, so does the number of weeks a person can draw unemployment benefits. For example, a person can receive 20 weeks of unemployment if the average unemployment rate is higher than 9% but only 13 weeks if the rate is less than 6%.
HB 1860, proposed by Rep. J. Eggleston, R-Maysville, sets tighter limits on the number of weeks a person can draw benefits when the state has low unemployment rates. If the rate is 3.5% or less, for example, they could receive eight weeks of benefits. With Missouris latest unemployment rate of 3.7%, eligible individuals could draw benefits for nine weeks.
In committee, proponents of the bill said it would incentivize people to rejoin the workforce when there are more jobs available.
This will help get those who are out of work back to work, help our struggling employers find and fill the many job openings that we have, and help our Missouri economy improve, Eggleston said Thursday, noting the bill has been in development for years.
The bill passed on a vote of 94-41. It now heads to the Senate.
Proudie and other Democrats said it was insulting to limit coverage for workers who had paid for unemployment insurance.
Editorials From Across The Country Call On Congress To Extend
Posted: Contra Costa Times Congress must extend unemployment benefits: In each of the past three recessions, Congress didn’t cut off extended aid until the long-term unemployment rate dropped to 1.3 percent. Today it’s 2.6 percent, according to the Center on Budget and Policy Priorities. Los Angeles Times Why not extend jobless benefits again?
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West Virginia Senate Passes Bills Changing Unemployment Benefits
West Virginia Senate President Craig Blair, R-Berkeley, listens to Tuesdays debate on proposed changes to unemployment benefits.
CHARLESTON, W.Va. Following nearly two hours of debate during Tuesdays floor session, the West Virginia Senate passed a pair of bills that would alter the states unemployment benefits.
Senate Bill 2 would link the length of time recipients can receive unemployment benefits to the states unemployment rate. Senate Bill 3 would require recipients to satisfy four criteria per week to prove they are actively seeking work.
Senate Bill 2 passed by a vote of 20-14. Senate Bill 3 passed by a vote of 23-11.
Under Senate Bill 2, unemployed West Virginians would be able to apply for up to 12 weeks of benefits if the states unemployment rate is 5.5% or below. An additional week of eligibility would be added for each 0.5% increase in the unemployment rate.
Current state law allows recipients to receive benefits for up to 26 weeks.
This will create an indexing system … tie the duration of unemployment benefits to states overall unemployment rate, recognizing the basic principal that in periods of low unemployment, or stated conversely, in periods of high job availability, unemployment benefits dont have to last as long as they do when jobs are more scarce, said Sen. Charles Trump, R-Morgan.
West Virginia is the first state in the country to propose such a move, according to Senate Majority Leader Tom Takubo, R-Kanawha.
Congress Extended Unemployment Benefits What Should Come Next
Americans receiving enhanced unemployment compensation during the pandemic will see their benefits continue, due to the passage of the American Rescue Plan. Lauren Bauer explains how those benefits have affected household finances and workers behavior, and why Congress should prepare for the next recession by adding automatic triggers to unemployment safety net programs.
Listen to Brookings podcasts here, on Apple or on Google podcasts, send email feedback to , and follow us at on Twitter.
Thanks to audio producer Gaston Reboredo, Chris McKenna, Fred Dews, Marie Wilken, and Camilo Ramirez for their support.
PITA: Youre listening to The Current, part of the Brookings Podcast Network. Im your host, Adrianna Pita.
Included in the American Rescue Plan, the $1.9 trillion COVID relief package signed on Thursday by President Biden, is an extension of federal unemployment benefits for workers who lost their jobs during the pandemic. This latest extension comes just in time, as previous unemployment benefits were due to expire this weekend.
Here to talk to us about why unemployment insurance is so important, and how to make the system better is Lauren Bauer, a fellow in Economic Studies and the Hamilton Project here at Brookings. Lauren, thanks for talking to us today.
BAUER: Anytime, happy to talk about it.
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Biden Stimulus Package Unemployment Extensions
Congress and President Biden have now passed into law the $2 trillion stimulus package, also known as the American Rescue Plan . It includes further unemployment program extensions until September 6th, 2021 for the PUA, PEUC and FPUC programs originally funded under the CARES act in 2020 and then extended via the CAA COVID Relief Bill. The need for another unemployment stimulus was reinforced by the prevailing high unemployment situation in many parts of the country due to the ongoing COVID related economic fallout.
Unemployment Benefit Extensions Per DOL Guidelines
The initial Biden stimulus package passed in the House included a $400 FPUC extra weekly payment but in order to get all Democrats in the Senate onboard it had to be cut back to $300 p/week. This amount is the same as the $300 weekly supplement approved under the CAA COVID relief bill was funded until March 14th, 2021 but will now be extended through to week ending September 4th, 2021. This provides another 25 weekly payments for a maximum of $7,500.
The $300 weekly FPUC payment lines up with the programs. Claimants should be able to rollover remaining weeks from the CAA funded extensions to the extended Pandemic Unemployment Assistance and Pandemic Emergency Unemployment Compensation programs. You can see a graphical representation of the past, current and proposed enhanced unemployment program extensions in the diagram below. See a full review of DOL guidelines this article.
Congress Sends Unemployment Extension To White House
Posted: Jul 22, 2010 · The House passed H.R. 4213, the Unemployment Compensation Extension Act, by a vote of 272 to 152 on Thursday. The legislation retroactively restores and extends the Emergency Unemployment Compensation and Extended Benefits programs through Nov. 30, 2010. The Senate passed the bill on Wednesday evening after overcoming a Republican
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A Compromise On Extending Unemployment Benefits
It appears highly likely that the President and his administration will have to provide some level of support to the millions of unemployed workers given the resurgence of the Coronavirus in several states that has forced extended business closures. As such a Senate proposal by the Democrats called The American Workforce Rescue Act , may provide a party line compromise that the president could get behind, particularly as the presidential election is only a few months away. The AWRA proposal would continue to provide the full $600 extra weekly unemployment payment as long as the states unemployment rate is above 11%. When it drops below 11% , it will start to phase out to $0 until the states unemployment rate drops below 6%. So essentially $100 less for every percentage drop between 11% and 6% of a states unemployment rate.
With the current provisions expiring in a few weeks, I expect that that Congress will eventually craft a bill to extend these UI benefits to the end of 2020 using a hybrid of one of the above proposals which may well also include another 2020 stimulus check to cover those not eligible for unemployment benefits.
The table below shows the impact of losing the extra $600 weekly payment against the maximum weekly benefit amount current paid by state unemployment agencies. As you can see, in several states it is pretty significant and the impact is much, much higher if you are not getting close to the maximum amount in your respective state.
Still Waiting For A Third Child Tax Credit Payment
Some families who received the July and August payments of the Child Tax Credit are experiencing a delay in getting the September instalment, the IRS has confirmed. The tax authority has announced a delay in distributing the September payment that went out on the 15th. The agency is working to resolve the issue but warn that some people may be unable to check their status on the IRS’ online portal.
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Will I Get More Money This Time Or Less
It depends. The tax break applies only to benefits received in 2020, whereas the reduced $300 weekly payments would be for 2021. Some people could get a tax cut under this plan because they got unemployment in 2020, but no longer do, so this deal would be a net gain for them, according to , a senior fellow at the Urban-Brookings Tax Policy Center.
The same is also true in reverse, Holtzblatt said: People who did not receive unemployment in 2020 but who are currently unemployed would get smaller benefits under this current plan, and no gain from the tax break.
Here’s one calculation that shows how this could end up bringing you more money, according to Andrew Stettner, a senior fellow at the progressive think tank The Century Foundation. Note that the additional unemployment insurance benefit will end Sept. 6 under the newest legislation.
Others remain skeptical. “Allowing a deduction or exclusion for UI benefits for tax purposes would not help the lowest-income workers and it would not be as progressive as simply giving people more UI benefits,” said Steve Wamhoff, director of federal tax policy at the Institute on Taxation and Economic Policy. “Workers with the lowest incomes pay federal payroll taxes but they earn too little to owe any personal income taxes. So if you give them a deduction for their personal income taxes, that does not help them at all.”