On March 25, 2020, members of the U.S. Senate voted to pass the Coronavirus Aid, Relief, and Economic Security Act (also known as the “CARES Act”). The eagerly anticipated CARES Act represents an agreement between the U.S. House of Representatives, the Senate, and the White House. It outlines a massive $2 trillion stimulus bill aimed at addressing both the country’s health care crisis and the financial devastation brought about by the coronavirus pandemic.
Under the CARES Act, individuals, businesses, state and local governments, and the health care system will be able to take advantage of various relief measures to ease the financial burdens being experienced at all levels during this turbulent and unprecedented time.
While the Senate has already passed the bill, the majority of House members are currently in their home districts and have not yet had the opportunity to follow suit, although they are expected to approve the bill in short order. President Trump has already declared he will sign the legislation as soon as it reaches his desk.
The CARES Act includes a large-scale economic relief plan designed to offer much-needed support to the country’s health care system which is struggling to provide needed pandemic-related treatment and financial assistance to state, local, and tribal and territorial governments. It also makes provisions available to private nonprofits whose business it is to provide critical and essential services. Significant economic relief to individuals, businesses, and other employers is also included in the CARES Act to help as many of those negatively impacted by the pandemic as possible.
Key CARES Act Provisions
Although there is still time for some of the following provisions to change before the act becomes a law, here are some of the CARES Act’s most significant provisions (as of the passage by the Senate):
- Rebates of up to $1,200 for singles, $1,200 for heads of households, and $2,400 for married couples filing jointly — plus an additional $500 per qualifying child (subject to income-based phaseouts starting at $75,000, $122,500 and $150,000, respectively);
- Expansion of unemployment benefits, including those for both self-employed and gig-economy workers;
- Waiver of the 10% penalty on COVID-19-related early distributions from IRAs, 401(k)s, and certain other retirement plans;
- Waiver of required minimum distribution rules for IRAs, 401(k)s, and certain other retirement plans;
- Expansion of charitable contribution tax deductions; and
- Exclusion for certain employer payments of student loans.
For Businesses and Other Employers
- Retention tax credit for eligible employers that continue to pay employee wages while their operations are fully or partially suspended as a result of certain COVID-19-related government orders;
- Deferral of the employer portion of payments of certain payroll taxes;
- Modification of net operating loss (NOL) rules and limitations on losses;
- Modification of the deduction limitation on business interest;
- Qualified improvement property technical correction, allowing qualifying interior improvements of buildings to be immediately expensed rather than depreciated over a period of years; and
- Expansion of the ways the Small Business Administration (SBA) is permitted to assist small businesses.
More Information on the CARES Act, Coming Soon
As the CARES Act moves ahead and is signed into law, we will update you with additional details and share with you the final parameters of the law.
If you have questions about how COVID-19 legislation affects your individual or business taxation situation, your Untracht Early advisors are always available by phone or e-mail to help you navigate this quickly changing landscape.