Is the American Rescue Plan still in effect? Mostly, no. The $1.9 trillion law signed on March 11, 2021 has largely run its course as of 2026. Stimulus payments can no longer be claimed, the expanded Child Tax Credit ended after 2021, enhanced Affordable Care Act subsidies lapsed at the end of 2025, and the tax exemption for student loan forgiveness expired on January 1, 2026. The one large piece still shaping budgets is the $350 billion in state and local fiscal recovery funds, which governments must finish spending by the end of 2026.
State and Local Recovery Funds Are Still Being Spent
The Coronavirus State and Local Fiscal Recovery Funds program is the most visible ARP piece still in motion. It sent $350 billion to state, territorial, local, and tribal governments and has paid for water and sewer upgrades, broadband expansion, public safety staffing, and community projects.1U.S. Department of the Treasury. State and Local Fiscal Recovery Funds If you see an “American Rescue Plan” sign on a road or utility job, this is the source.
Governments had to formally obligate their funds, through signed contracts or binding agreements, by December 31, 2024. Anything not obligated by then had to go back to the Treasury.2U.S. Department of the Treasury. Coronavirus State and Local Fiscal Recovery Funds Compliance and Reporting Guidance For funds that were obligated, the spending deadlines in 2026 are:
- Most eligible uses: spend by December 31, 2026.
- Surface transportation and Title I projects: spend by September 30, 2026.
- Administrative closeout costs: covered through April 30, 2027.
Anything left unspent after those dates goes back to Treasury. Final Project and Expenditure Reports are due April 30, 2026, and the closeout report is due April 30, 2027.3U.S. Department of the Treasury. State and Local Fiscal Recovery Funds – Reporting and Compliance A city that signed a contract for a broadband build but hasn’t finished construction is under real pressure to complete the work or lose the money.
Enhanced ACA Marketplace Subsidies Have Expired
The ARP boost to Affordable Care Act subsidies was one of the law’s biggest ongoing effects on household budgets, and it ended December 31, 2025. The law had wiped out the “subsidy cliff” that cut off help above 400% of the federal poverty level, and it capped a household’s benchmark silver plan premium at 8.5% of income. The Inflation Reduction Act of 2022 stretched those enhancements through 2025. Congress did not extend them again.
Starting in 2026, the original ACA subsidy structure is back. People earning above 400% of the federal poverty level are once again ineligible for any premium assistance. For those still eligible, the required income contributions are higher than under the enhanced rules. Researchers have estimated the reversion will produce millions fewer marketplace enrollees and materially higher net premiums at every income level on Healthcare.gov and state exchanges.
The hardest hit are people in their 50s and 60s who earn just above the 400% threshold. A couple in their early 60s in that band could face annual premiums above $20,000 with no government help, compared to roughly $7,000 under the enhanced rules. If you’re shopping for 2026 marketplace coverage, check your eligibility through Healthcare.gov or your state’s exchange before assuming last year’s numbers still apply.
For workers offered employer coverage, the ACA’s affordability standard also shifted. In 2026, employer coverage counts as affordable if your share of the lowest-cost self-only plan is 9.96% of household income or less, up from 9.02% in 2025. If your plan meets that test, you can’t get marketplace subsidies regardless of what the plan actually costs your family.
Student Loan Forgiveness Is Taxable Again
One ARP provision that flew under the radar for years became impossible to ignore on January 1, 2026: the temporary federal tax exemption for discharged student loans expired. From 2021 through 2025, borrowers whose federal student loans were forgiven owed no federal income tax on the canceled balance. That exemption is gone. Forgiveness occurring in 2026 or later can be treated as taxable income by the IRS.
This matters most for borrowers in income-driven repayment plans, which forgive remaining balances after 20 or 25 years of payments. An $80,000 forgiven balance could produce a $15,000 or higher federal tax bill depending on your bracket. Before the ARP, this was sometimes called the “tax bomb,” and it is back.
Two carve-outs survive because they sit in a separate part of the tax code, not the ARP. Forgiveness through the Public Service Loan Forgiveness program remains permanently tax-free for borrowers who work for qualifying government or nonprofit employers and make 120 qualifying payments. Loan discharges due to a borrower’s death or total and permanent disability are also permanently excluded from taxable income.4Office of the Law Revision Counsel. 26 U.S. Code 108 – Income From Discharge of Indebtedness
Employee Retention Credit: The Claim Window Is Closed, but Audits Continue
The Employee Retention Credit offered eligible businesses a refundable payroll tax credit for keeping workers on the payroll during the pandemic. The filing window for ERC claims closed on April 15, 2025, and no new claims can be submitted.5Taxpayer Advocate Service. The ERC Claim Period Has Closed The aftermath, though, is a live 2026 issue.
The IRS reported closing all non-examined ERC claims by December 31, 2025. Roughly 41,000 claims remain under active audit or have been fully or partially disallowed. The IRS had imposed a moratorium on new claim processing in September 2023 over widespread fraud concerns, and scrutiny has only intensified since.
Businesses that claimed the ERC should know the audit window is unusually long. The One Big Beautiful Bill Act, signed in July 2025, extended the statute of limitations for IRS audits of third- and fourth-quarter 2021 ERC claims to six years from the return filing date. For earlier quarters, the statute is five years. The IRS’s second Voluntary Disclosure Program, which had let businesses repay improperly claimed credits at a reduced rate, closed on November 22, 2024.6Internal Revenue Service. Employee Retention Credit – Voluntary Disclosure Program There is no voluntary settlement path open now.
Stimulus Payments Can No Longer Be Claimed
The third round of Economic Impact Payments, up to $1,400 per eligible individual plus $1,400 per dependent, finished its primary distribution soon after the law passed.7U.S. Department of the Treasury. Economic Impact Payments People who missed theirs could claim the money as a Recovery Rebate Credit on a 2021 federal return.8Internal Revenue Service. Economic Impact Payments
That window has closed. Federal law gives taxpayers three years from a return’s due date to claim a refund, and the 2021 return was due April 15, 2022, making the final date to claim the Recovery Rebate Credit April 15, 2025. As that deadline approached, the IRS estimated more than 1.1 million people had unclaimed 2021 refunds, with over $1 billion unclaimed in total.9Internal Revenue Service. More Than $1 Billion in 2021 Tax Refunds Still Unclaimed
There is one narrow exception. The Disaster Related Extension of Deadlines Act, signed in December 2025, ensures that IRS filing postponements for federally declared disasters count toward the three-year refund lookback. If you were in a qualifying disaster area and received a postponement pushing your effective 2021 filing deadline past April 15, 2025, you may still have time. Everyone else has missed the $1,400 credit.
The Expanded Child Tax Credit Ended After 2021
The ARP raised the Child Tax Credit for the 2021 tax year to $3,600 for children age five and under and $3,000 for children ages six through seventeen.10Internal Revenue Service. 2021 Child Tax Credit and Advance Child Tax Credit Payments – Topic C: Calculation of the 2021 Child Tax Credit The credit was fully refundable for that year, and half was paid out monthly from July through December 2021.
The expansion applied only to 2021. Efforts in Congress to extend the higher amounts failed, and the credit reverted to its pre-ARP structure for 2022 forward. The same three-year refund window applied: parents who never filed a 2021 return had until April 15, 2025, to claim the expanded credit.11Internal Revenue Service. Time You Can Claim a Credit or Refund That deadline has passed.
Housing Assistance Has Mostly Wound Down
The ARP funded two large housing programs run through state and local agencies: the Emergency Rental Assistance program, with more than $46 billion for tenants behind on rent, and the Homeowner Assistance Fund, with $10 billion for homeowners struggling with mortgage payments, property taxes, and utility bills.12U.S. Department of the Treasury. Emergency Rental Assistance Program
The ERA2 program’s federal period of performance ended September 30, 2025, and grantees can no longer use ERA2 funds to assist renters.12U.S. Department of the Treasury. Emergency Rental Assistance Program The program is effectively closed nationwide.
The Homeowner Assistance Fund tells a similar story with a few exceptions. As of early 2026, most state HAF programs have closed after exhausting their allocations. A small number of states, including Georgia, Montana, New Jersey, and North Dakota, still have active programs accepting applications. If you need mortgage or property tax help, check with your state housing finance agency, but don’t count on funds being available.