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  • Writer's pictureHarry N. Stout

185- Get Your Stimulus Cash

On March 11, the President signed the stimulus legislation titled “The American Rescue Plan Act of 2021” into law. Much has been written about the nearly 600-page law. I will not get into the pros and cons of the law but will focus your attention on the key provisions that relate to personal finance.

The law mandates the following key items for individuals:

  • $1,400 direct payments to individuals earning less than $75,000, heads of households earning less than $112,500 and married couples earning less than $150,000. Phase-outs begin after that, cutting off completely at $80,000 for individuals, $120,000 for heads of households and $160,000 for couples. Remember these payments are not taxable.

  • Those individuals eligible for the direct payments have been expanded to include dependent adults. The direct payments for these individuals will be sent to the taxpayer supporting them as a dependent.

  • As of this writing, the direct payments can be claimed by private creditors in payment of debts before you receive them in contrast to the prior stimulus payments. This provision may be amended in the next week or so.

  • Federal unemployment payments of $300 per week will be extended through September 6.

  • The first $10,200 of jobless benefits will be non-taxable for households with incomes under $150,000, but only for benefits received in 2020. If you have already filed your 2020 income tax return and received unemployment benefits that are now not taxable, you will need to file an amended income tax return to receive the money you overpaid in taxes.

  • The Act provides a 100% subsidy of COBRA health insurance premiums to ensure that the laid-off workers can remain on their employer health plans at no cost from April 1, 2021 through the end of September 2021.

  • For 2021 the Act temporarily increases the child tax credit amount from $2,000 to $3,000 for children between the ages of 6 and 17, and to $3,600 for children under the age of 6 for most households (there is still a phase out for higher earners) and makes it fully refundable. Starting in July, the Internal Revenue Service will advance and distribute half this money for 2021 to most families with qualifying children in monthly payments of either $250 or $300 per child. The IRS will deliver the balance at tax time in 2022.

  • The child and dependent care tax credit, which helps defray child care expenses, was increased from up to $2,100 to up to $4,000 for one child, or $8,000 for two or more children. As with the child tax credit, it’s fully refundable, so families with little or no income can still benefit. And families earning as much as $125,000 are eligible for the full credit.

  • A key provision relates to student loan forgiveness. Any student debt that is forgiven after Dec. 31, 2020, or that becomes forgiven through Jan. 1, 2026, is no longer subject to taxation. This provision was included as an initial step to what many in Congress anticipate will be legislation to forgive some portion of existing student loan balances.

  • $20 billion for emergency rental assistance.


The stimulus legislation provides overs $1.9 trillion of funding for a variety of provisions meant to lessen the economic blow of COVID-19 on families. The Act’s provisions will be disbursed over the next few years. There are a number of provisions that relate directly to your money that you should understand and use the funds to improve your financial situation.


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