The CARES Act, short for the Coronavirus Aid, Relief, and Economic Security Act, was a roughly $2.2 trillion emergency spending law signed on March 27, 2020, to stabilize the U.S. economy during the COVID-19 pandemic.1U.S. Department of the Treasury. About the CARES Act and the Consolidated Appropriations Act It sent stimulus checks to households, expanded unemployment, created forgivable loans for small businesses, paused federal student loan payments, funded hospitals and public health agencies, and delivered aid to states, tribes, and hard-hit industries. Most of its direct benefits have ended. Its compliance and enforcement tail is still running.
Stimulus Checks for Individuals
The most visible piece of the law was the first round of Economic Impact Payments. Eligible adults received up to $1,200, and qualifying children under 17 added $500 each, so a family of four could receive up to $3,400.2U.S. Department of the Treasury. Economic Impact Payments
Amounts depended on adjusted gross income. Single filers earning up to $75,000, heads of household up to $112,500, and married couples filing jointly up to $150,000 received the full amount. Above those thresholds, payments shrank by $5 for every $100 of additional income. Single filers over $99,000 and joint filers over $198,000 with no children received nothing.3Internal Revenue Service. Economic Impact Payments: What You Need to Know
The payments were advance refundable tax credits, so they were not taxable income. People who missed the first round could originally claim it through the Recovery Rebate Credit on a 2020 tax return, but that window closed in May 2024.4National Taxpayer Advocate. Last Chance to Claim the 2020 Recovery Rebate Credit The two later rounds of stimulus payments came from separate legislation, not the CARES Act.
Expanded Unemployment Benefits
The Act created two federal unemployment programs on top of the regular state system. Federal Pandemic Unemployment Compensation (FPUC) added $600 per week to whatever a worker received from their state program, running through the last week of unemployment ending before July 31, 2020.5U.S. Department of Labor. U.S. Department of Labor Publishes Guidance on Federal Pandemic Unemployment Compensation
Pandemic Unemployment Assistance (PUA) opened unemployment to workers who normally couldn’t collect: freelancers, independent contractors, gig workers, and the self-employed. Before the CARES Act, those groups had no access to the unemployment system at all.
All pandemic-era federal unemployment programs ended in September 2021. Some workers who received overpayments are still dealing with state recovery efforts. States can waive recovery of non-fraudulent overpayments when the worker was not at fault and repayment would cause hardship. Recovery of fraudulent overpayments can never be waived, and states must apply a minimum 15 percent penalty to fraud-related overpayments.6U.S. Department of Labor. Unemployment Insurance Program Letter No. 20-21, Change 1
Small Business Relief
Three programs did the heavy lifting for businesses: the Paycheck Protection Program, Economic Injury Disaster Loans, and the Employee Retention Credit.
Paycheck Protection Program
The Paycheck Protection Program (PPP) offered forgivable loans meant to keep employees on payroll. The program authorized up to $659 billion in lending.7U.S. Department of the Treasury. Paycheck Protection Program Businesses could borrow up to 2.5 times their average monthly payroll, capped at $10 million.
A loan could be fully forgiven if the business spent at least 60 percent of the funds on payroll, with the rest on eligible expenses like rent, utilities, and mortgage interest. The 60 percent floor was a June 2020 adjustment; the original CARES Act set it at 75 percent, and Congress lowered it through the PPP Flexibility Act.8U.S. Small Business Administration. PPP Loan Forgiveness Forgiven amounts are excluded from federal gross income.
Economic Injury Disaster Loans
The Act expanded the SBA’s Economic Injury Disaster Loan (EIDL) program to cover COVID-19 losses. Unlike PPP loans, these were traditional loans with a 3.75 percent fixed interest rate for businesses (2.75 percent for nonprofits) and a 30-year term. The first two years were deferred, though interest accrued during deferment.9U.S. Small Business Administration. About COVID-19 EIDL The program also included emergency advances of up to $10,000 that did not have to be repaid, even if the underlying loan application was denied. Because demand overwhelmed the program, the SBA limited advances to $1,000 per employee up to the $10,000 cap.
Employee Retention Credit
The Employee Retention Credit (ERC) was a refundable payroll tax credit for keeping workers on staff. For 2020, it equaled 50 percent of qualified wages up to $10,000 per employee, or a maximum of $5,000 per employee. Businesses qualified if a government order fully or partially shut down operations, or if their gross receipts dropped at least 50 percent compared to the same quarter in 2019.10Internal Revenue Service. COVID-19-Related Employee Retention Credits: Overview
The ERC turned into one of the most problematic pieces of pandemic relief. Aggressive promoters convinced thousands of ineligible businesses to file claims, often for steep fees. The IRS imposed a moratorium on new ERC claims in September 2023 and is still processing a backlog that exceeded 597,000 claims as of early 2025.11National Taxpayer Advocate. The ERC Claim Period Has Closed The filing window closed on April 15, 2025.
Retirement and Tax Provisions
Section 2202 let qualified individuals withdraw up to $100,000 from 401(k) plans, 403(b) plans, and IRAs between January 1 and December 30, 2020, without the usual 10 percent early withdrawal penalty. The withdrawal was still taxable, but the tax could be spread evenly over three years. Anyone who could afford to put the money back had three years from the date of the distribution to repay it, and repayments were treated as direct rollovers, allowing amended returns to recover taxes already paid.12Internal Revenue Service. Coronavirus-Related Relief for Retirement Plans and IRAs Questions and Answers To qualify, the individual needed a COVID-19 diagnosis, a spouse or dependent with a diagnosis, or financial harm such as a layoff, reduced hours, or business closure.
The Act also waived required minimum distributions from defined contribution plans and IRAs for all of 2020, including 2019 RMDs due by April 1, 2020, for people who had just reached their required beginning date.13Internal Revenue Service. Notice 2020-51: Guidance on Waiver of 2020 Required Minimum Distributions Retirees didn’t have to sell investments at pandemic-depressed prices just to satisfy the distribution rule.
A separate provision created a $300 above-the-line deduction for cash charitable contributions available to taxpayers taking the standard deduction. The CARES Act version applied only to 2020, though later legislation extended and expanded it.
Housing and Student Loan Protections
Section 4024 imposed a 120-day eviction moratorium from March 27 through July 24, 2020. During that period, landlords of covered properties could not file evictions for nonpayment of rent or charge related late fees. Covered properties were those with federally backed mortgages and those receiving federal housing assistance.14U.S. Department of Housing and Urban Development. CARES Act Eviction Moratorium HTF FAQs Tenants in privately financed housing with no federal connection were not protected.
On student loans, the Act automatically suspended payments and set interest to 0 percent on federal student loans held by the Department of Education. It halted involuntary collection on defaulted federal loans, including wage garnishments and seizure of tax refunds. Months in the pause counted toward loan forgiveness and rehabilitation programs, so borrowers in income-driven repayment or pursuing Public Service Loan Forgiveness didn’t lose credit. The pause did not cover private student loans or commercially held Federal Family Education Loans that hadn’t been consolidated into the Direct Loan program.
Through a series of executive and legislative extensions, the pause lasted years. Interest resumed on September 1, 2023, and payments restarted in October 2023. The Department of Education added a 12-month on-ramp period through September 30, 2024, during which missed payments did not trigger default or negative credit reporting.15National Credit Union Administration. Resumption of Federal Student Loan Payments
Healthcare and Public Health Funding
The Act directed $100 billion to a Provider Relief Fund for hospitals and healthcare providers, covering both pandemic-related expenses and revenue lost when elective procedures were canceled.16House Committee on Ways and Means. CARES Act Provider Relief Fund Fact Sheet A share of the fund reimbursed providers at Medicare rates for treating uninsured COVID-19 patients. The Health Resources and Services Administration administers the fund, and providers who took payments remain subject to reporting and auditing requirements under the Fiscal Responsibility Act of 2023.17Health Resources & Services Administration. Provider Relief Reporting and Auditing
Medicare inpatient payments for COVID-19 cases were increased by raising the diagnosis-related group weighting factor by 15 percent during the public health emergency.18U.S. Congress. Text – S.3548 – 116th Congress: CARES Act Beyond hospitals, the Act appropriated roughly $4.3 billion to the Centers for Disease Control and Prevention for surveillance, laboratory support, and state-level pandemic response.19Senate Appropriations Committee. Coronavirus Emergency Supplemental Appropriations Summary Other funds accelerated vaccine development, expanded testing, and restocked the Strategic National Stockpile.
State, Local, and Industry Aid
The Act established a $150 billion Coronavirus Relief Fund for state, local, and tribal governments to cover necessary pandemic-related expenditures not already budgeted, incurred between March 1 and December 30, 2020.20Internal Revenue Service. CARES Act Coronavirus Relief Fund Frequently Asked Questions Governments used it for PPE procurement, emergency payroll for first responders, and other direct pandemic costs.
The airline industry received $32 billion in payroll support: $25 billion for passenger carriers, $4 billion for cargo carriers, and $3 billion for ground-service contractors. In exchange, airlines accepted restrictions on layoffs, stock buybacks, and executive compensation. The Act also suspended aviation excise taxes on passenger transport, cargo, and fuel through the end of 2020.
To stabilize broader financial markets, the Act made up to $454 billion available to the Treasury to backstop Federal Reserve emergency lending. The Fed used that backing to launch nine lending programs targeting corporate credit, municipal borrowing, and small and mid-sized business loans through the Main Street Lending Program.21U.S. Government Accountability Office. Federal Reserve Lending Programs: Use of CARES Act-Supported Programs Has Been Limited
What’s Still Active in 2026
The direct benefits are done. The enforcement machinery is not. Congress passed two laws in 2022 extending the statute of limitations for PPP and EIDL fraud from five years to ten, matching bank fraud. Federal investigators have until at least 2030 to pursue fraudulent pandemic loan claims.22Pandemic Response Accountability Committee. PRAC Welcomes Newly-Passed Legislation Extending Statute of Limitations on Pandemic Relief Fraud The SBA flags forgiven PPP loans it later suspects were ineligible regardless of loan size. Loans of $25,000 or less may be treated as immaterial and deprioritized for recovery, but they are still flagged and reviewed.23U.S. Small Business Administration. SBA’s Actions to Address Forgiven PPP Loans Subsequently Flagged as Potentially Ineligible
The IRS continues to work through the ERC backlog and has indicated resolution may stretch through the end of 2025 or beyond. Businesses that received incorrect payments face repayment plus penalties and interest, and the IRS has warned that willful fraud can lead to criminal prosecution. A business that filed based on a promoter’s promises without verifying eligibility still bears full responsibility for the claim.24Internal Revenue Service. Frequently Asked Questions About the Employee Retention Credit
EIDL repayments are ongoing. Most borrowers are past the two-year deferment and are making monthly payments on the 30-year term.9U.S. Small Business Administration. About COVID-19 EIDL Provider Relief Fund recipients remain subject to audit. The compliance obligations the CARES Act set in motion will keep running for years after its benefits ended.