American Rescue Plan Act of 2021: An Analysis

Summary

This practice note discusses the tax implications of the American Rescue Plan Act of 2021, P.L. 117-2, (the Act), commonly referred to as H.R. 1319, signed into law by President Biden on March 11, 2021. The Act is the first major legislation passed under the Biden Administration. The Act provides for direct payments, unemployment benefits, state and local funding, aid for schools and public health, and various credits intended to accelerate the nation's recovery from the economic and health effects of the novel coronavirus (COVID-19) pandemic. The Act also expands the scope of Internal Revenue Code (I.R.C.) Section 162(m) deduction limits on executive compensation, repeals the I.R.C. Section 864(f) worldwide interest expense allocation election, extends and expands the employee retention tax credit (ERTC), and excludes from gross income student loan debt forgiven from 2021 through 2025.