While markets wait to see what the final size and scope of the proposed $1.9 trillion Biden stimulus will be, what we know currently about the key support components is the following:
“Economic Impact Payments” of $1,400 per person plus an additional $1,400 per dependent phasing out starting at $75,000 for single, $112,500 for head of households and $150,000 for married (fully phased out at $100,000 for single, $150,000 for head of households and $200,000 for married).
Temporary enhanced Child Tax Credit: Fully refundable $3600 per child age under 6 and $3000 per child age 6-17 with gradual phase out of $50 for each $1000 over the threshold of $75,000 for single, $112,500 for head of households, and $150,000 for married. Credits are paid out monthly in even increments starting July 2021 through June 2022 (e.g. $300 for age under 6, or $250 for age 6-17 per month per child).
What does that mean in practical terms?
As BofA economist Joseph Song explains, the big winners of the proposal will be be low to middle-income households with young children. As shown by the orange line below, a family of 4 making less than $150,000 a year could qualify for $12,800 in federal income support over the next 15 months. To be sure, not all of the child tax credit will be new money as the current tax code provides a $2000 tax credit per child, but the new provision is more generous in two ways: Read more…