Summary of the December 2020 Stimulus Bill

After much negotiation, a $900 billion stimulus package was finally passed in late December of 2020. Following is our simple summary of the 5,593-page Consolidated Appropriations Act, signed into law on December 27. Let’s dive in.

Stimulus Money
The $600 direct payments, targeted at individuals making $75,000 a year or less, is also available for filers under "head of household" status earning up to $112,000. Couples who make up to $150,000 a year would get $1,200. Many of the payments were issued in December and landed directly in bank checking accounts that the IRS had on record. If you did not get a check but feel like you qualify, you can track the process through this IRS website.

Expanded PPP Loans
The December stimulus also expanded a number of benefits provided under the Paycheck Protection Program (PPP).

  • PPP eligibility rules include a new $2 million cap, limits of no more than 300 employees (instead of 500) and the requirement of having experienced a drop in sales by 25% from the previous year in at least one quarter.
  • The list of expenses a PPP loan can be used to pay has been expanded to include things like supplies from vendors, personal protective equipment (PPE), software and cloud services that help transitions to remote work.
  • Expenses paid for with the proceeds of a PPP loan (old or new) are now eligible for tax deductions. 

Business Tax Credits and Support
The December stimulus also expanded the timeline for multiple tax credits that were part of the CARES Act from early 2020.

  • The Employee Retention Credit (ERC) has been extended through July 1, 2021. Qualifying wages have changed from $10,000 per quarter, per employee, instead of only $10,000 per employee as before. They also kick in at 500, rather than 100, employees.
  • Businesses are now able to take both an ERC and a PPP loan at the same time. 
  • The deferral for Employer Payroll Tax has been extended from April 30, 2021, to December 31, 2021.
  • Tax credits given for paid sick leave and family leave have been extended through March 31, 2021. 
  • Paid leave provisions under the Family First Coronavirus Response Act (FFCRA) have changed. Employers are no longer required to provide paid sick leave, though they can voluntarily extend it through March 31, 2021. This also expands the period under which an employer can take an FFCRA tax credit. 
  • The CARES Act allows for business to pay up to $5,250 towards student debt of employees. Both employers and employees get significant tax advantages from this program, which was expanded in the December stimulus through 2025.

With the new administration in place, there is likely to be continued stimulus and changes in tax rules going forward. We will continue to provide summaries and updates as needed.

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