The American Rescue Plan Act of 2021 was a $1.9 trillion federal pandemic relief law signed on March 11, 2021, and its benefits and provisions covered direct payments to households, expanded tax credits, extended unemployment aid, grants for small businesses, hundreds of billions for state and local governments, and new help with rent, mortgages, and health coverage.1Congress.gov. Public Law 117-2 – American Rescue Plan Act of 2021 Most of the individual benefits were temporary and have since expired. A handful reshaped programs that are still running.
$1,400 Stimulus Payments
The law authorized the third round of Economic Impact Payments: up to $1,400 per eligible individual, $2,800 for married couples filing jointly, and another $1,400 for each qualifying dependent.2U.S. Department of the Treasury. Economic Impact Payments Full payments went to single filers with adjusted gross income up to $75,000, heads of household up to $112,500, and joint filers up to $150,000. Payments phased out entirely at $80,000, $120,000, and $160,000.
Unlike earlier rounds, dependents of any age counted, not just children under 17. A family with two parents and three college-age children could receive $7,000, where prior rounds would have paid $2,800.
The payments were an advance on the 2021 Recovery Rebate Credit. Anyone who never received the money, or received less than they qualified for, had until April 15, 2025 to file a 2021 return and claim the difference.3Internal Revenue Service. IRS Reminds Eligible 2020 and 2021 Non-Filers to Claim Recovery Rebate Credit Before Time Runs Out That window has closed. Unclaimed third-round payments can no longer be recovered.
Expanded Child Tax Credit
For 2021 only, the Child Tax Credit rose from $2,000 to $3,600 per child age five and under, and to $3,000 per child ages six through seventeen.4Internal Revenue Service. Calculation of the 2021 Child Tax Credit The credit became fully refundable, so families with no federal income tax liability could still receive the full amount as a refund.
Half the credit went out in advance. Starting in July 2021, Treasury sent monthly payments of $300 per younger child and $250 per older child. Families claimed the remaining half on their 2021 return. The expanded amount phased down starting at $75,000 for single filers, $112,500 for heads of household, and $150,000 for joint filers, eventually settling at the standard $2,000 credit for higher earners.4Internal Revenue Service. Calculation of the 2021 Child Tax Credit
The expansion did not carry into 2022. The credit reverted to $2,000 per child with partial refundability, and the monthly payments ended. Proposals to make the expansion permanent have not passed Congress.
Expanded EITC for Workers Without Children
The law temporarily overhauled the Earned Income Tax Credit for workers without qualifying children. The maximum credit for this group nearly tripled, rising from roughly $543 to $1,502 for the 2021 tax year. The minimum age for eligibility dropped from 25 to 19 for most workers, and the upper age cap was eliminated entirely, letting workers 65 and older claim the childless EITC for the first time.5Congress.gov. The American Rescue Plan Act of 2021 (ARPA; P.L. 117-2): Title IX These EITC changes applied only to 2021 and have since expired.
Unemployment Benefits and the $10,200 Tax Exclusion
The Federal Pandemic Unemployment Compensation program continued a $300 weekly supplement on top of regular state or federal jobless benefits, running from mid-March through September 2021.6Employment and Training Administration. Special Federal Extension and Supplemental Benefit Programs The law also extended Pandemic Unemployment Assistance, which covered self-employed and gig workers who normally do not qualify, and Pandemic Emergency Unemployment Compensation, which added weeks for people who had used up their regular state benefits.
For 2020 taxes only, workers with modified adjusted gross income below $150,000 could exclude up to $10,200 of unemployment compensation from federal taxable income. On a joint return, the exclusion applied to each spouse, sheltering up to $20,400 combined.7Internal Revenue Service. 2020 Unemployment Compensation Exclusion FAQs People who had already filed 2020 returns before the law passed received automatic IRS adjustments and refunds.
Small Business Relief
Restaurant Revitalization Fund
The Restaurant Revitalization Fund provided $28.6 billion in direct grants to restaurants, bars, food trucks, caterers, and similar food and beverage businesses that could show pandemic-related revenue losses.8U.S. Small Business Administration Office of Inspector General. Audit of SBA’s Restaurant Revitalization Fund Award Practices Grants were calculated from the drop between 2019 and 2020 gross receipts, minus other relief already received, capped at $10 million per business and $5 million per location.9U.S. Small Business Administration. Restaurant Revitalization Fund The grants were excluded from federal gross income, and recipients did not lose the associated business expense deductions.10Internal Revenue Service. Revenue Procedure 2021-49
Shuttered Venue Operators Grants and PPP
Theaters, live music venues, museums, and performing arts organizations could apply for Shuttered Venue Operators Grants, a program that distributed more than $16 billion.11U.S. Small Business Administration. About Shuttered Venue Operators Grant Applicants had to show at least a 25% drop in gross earned revenue in a qualifying 2020 quarter compared with the same quarter in 2019.
The law also added $7.25 billion to the Paycheck Protection Program and widened eligibility to more nonprofit organizations.12Federal Register. Business Loan Program Temporary Changes; Paycheck Protection Program as Amended by American Rescue Plan Act PPP loans could be fully forgiven when spent on payroll and other qualifying costs.
State and Local Recovery Funds
The single largest line in the law was the $350 billion Coronavirus State and Local Fiscal Recovery Fund, sent to states, counties, cities, tribal governments, and U.S. territories.13U.S. Government Accountability Office. COVID-19 Relief: State and Local Fiscal Recovery Funds Spending Governments could spend the money in four broad categories:
- Public health and economic recovery, including help for households and small businesses.
- Revenue replacement, up to the amount of revenue lost during the pandemic, to keep government services running.
- Premium pay for essential workers in high-risk sectors.
- Water, sewer, and broadband infrastructure.14U.S. Department of the Treasury. State and Local Fiscal Recovery Funds – Eligible Uses
A 2023 rule update added surface transportation projects as an eligible use. Local governments have used the funds for work residents encounter daily, from upgrading aging water mains to building out broadband in rural areas.
Schools and Child Care
The Elementary and Secondary School Emergency Relief Fund (ARP ESSER) sent money directly to school districts for pandemic-related needs, with at least 20% reserved for evidence-based programs addressing learning loss, such as summer school, tutoring, and extended-day instruction. Districts also used the money to hire counselors, invest in educational technology, reduce class sizes, and support student mental health.
Child care received $39 billion: $24 billion in stabilization grants for providers at risk of closing, and $15 billion in supplemental funds through the existing Child Care and Development Fund.15Administration for Children and Families. American Rescue Plan Act Child Care Stabilization Funds FAQs Stabilization grants went straight to providers for rent, payroll, and personal protective equipment. The child care industry had lost about one-third of its workforce early in the pandemic, and these grants were the main federal tool for keeping surviving providers open.
Rental and Homeowner Assistance
The Emergency Rental Assistance Program received $21.55 billion to help tenants behind on rent and utilities.16U.S. Department of the Treasury. Emergency Rental Assistance Program Money flowed through state and local governments, which paid landlords on behalf of qualifying tenants. To qualify, renters had to show a risk of homelessness or housing instability and have household income below 80% of the area median.
The Homeowner Assistance Fund received nearly $10 billion to help homeowners with mortgage payments, property taxes, and insurance costs that had become unmanageable due to pandemic-related hardship.17U.S. Department of the Treasury. Homeowner Assistance Fund Each state designed its own program with its own caps and application process, so the amount of help varies widely by state.
Health Coverage
Free COBRA Coverage Through September 2021
Workers who lost employer-sponsored health coverage because they were laid off or had their hours reduced received a 100% federal subsidy for COBRA continuation premiums from April 1 through September 30, 2021.18State Health and Value Strategies. COBRA Assistance in the American Rescue Plan Act: A Guide for States COBRA is expensive because the former employee normally pays both the worker and employer shares of the premium, so the subsidy was worth thousands of dollars for many households. Workers who voluntarily quit did not qualify.
Expanded ACA Premium Tax Credits
The law temporarily expanded Affordable Care Act premium tax credits in two ways. It increased subsidy amounts across all income levels, lowering the share of income households were expected to put toward marketplace premiums. It also removed the income cap that had cut off subsidies at 400% of the federal poverty level, opening subsidies to higher-income households for the first time and capping benchmark plan contributions at 8.5% of household income.
The enhanced subsidies were first set for 2021 and 2022. The Inflation Reduction Act of 2022 extended them through the end of 2025. As of early 2026, the enhanced premium tax credits have expired and subsidies have reverted to pre-2021 levels. Proposals to restore or extend them are under consideration in Congress, but no extension has been enacted.