The American Rescue Plan, signed by President Biden on March 11, 2021, contains many important benefits for children and families. This page will be updated as more information becomes available. Follow HCAN on social media, and sign up for our email newsletter below, to get the latest updates.
Child Tax Credit
Many families with children can receive a much higher child tax credit this year.
The child tax credit for 2021 is:
- $3,600 per child under age 6
$3,000 per child age 6-17
This amount will phase out for higher incomes (see below).
How will families receive this?
- You can receive half of your total credit as monthly payments between July–December 2021.
- You can claim the other half in your 2021 tax return (which you’ll file in 2022).
The IRS will create an online portal where you can update the number of children you have, your marital status, and other important information so you can receive your advance payments this year. Follow HCAN on social media, and sign up for our email newsletter below, to get alerted when the online portal is active.
What could this look like?
- Imagine a family with three kids: a newborn, a 2-year-old, and a 7-year-old.
- Their total child tax credit could be $10,200 (if their income is under the limit).
- This family could receive $850/month between July–December 2021. (This adds up to half of the total credit, or $5,100.)
- The family could then claim the remaining half, $5,100, on their tax return filed in 2022.
The credit will begin to phase out for:
- $75,000 for single filers
- $112,500 for head-of-household returns
- $150,000 for joint returns
The IRS will look at your 2020 tax return, or if that’s not filed, then your 2019 tax return.
What’s different this year? The American Rescue Plan changes major aspects of the child tax credit for 2021:
- The credit amount is higher (up from $2,000).
- 17-year-old children are included.
- The credit is fully “refundable,” ensuring that even the lowest income families can receive the full credit.
- Eligible families can receive half of the credit as advance payments, unless you opt out.
“These changes are estimated to help over 300,000 children in Hawai‘i who currently don’t qualify for the full tax credit,” according to Senator Brian Schatz.
This relief package includes stimulus payments of up to $1,400.
- People with a Social Security number who meet the income limits (see below).
- You’ll get an additional payment of $1,400 for any eligible dependent. This time, adult dependents — like full-time students (under age 24), disabled adults, and the elderly — are eligible.
- Families with mixed immigration statuses are eligible, as long as at least one household member has a Social Security number. (For example, this includes children whose parents don’t have a Social Security number.)
How will you receive this?
- You could receive a direct deposit as soon as March 13-14, 2021.
- The IRS will provide more information on its website.
The payment will begin to phase out for incomes above:
- $75,000 for individuals. If your adjusted gross income (AGI) is $80,000 or more, then you’re not eligible for any payment.
- $112,500 for head-of-household filers. If your AGI is $120,000 or more, then you’re not eligible.
- $150,000 for joint filers. If your AGI is $160,000 or more, then you’re not eligible.
The IRS will look at your 2020 tax return, or if that’s not filed, then your 2019 tax return.
Looking for your payment? Visit the IRS website.
Child and dependent care credit
This year, you can get a bigger tax credit for your care expenses.
- The credit can cover up to 50% of your expenses, for a maximum of $8,000 for one dependent, or $16,000 for two or more.
- Families who earn up to $125,000 can receive the full credit. The credit phases out for higher earners.
- The credit is fully “refundable,” ensuring that even the lowest income families can benefit.
Earned income tax credit
More information coming soon.
Sick and family leave credits
Employees can receive up to 14 weeks of paid leave for pandemic-related reasons through September 30, 2021, if their employers opt-in.
This is a voluntary program for employers, and most employers with fewer than 500 employees are eligible. Employers can cover this leave with tax credits through the American Rescue Plan Act.
As an employee, if you think you’re eligible for paid leave (see criteria below) and need to request it, start by talking to your management or a member of your human resources department as soon as possible.
Employees may qualify if you’re unable to work or telework for any of the following reasons:
- You need to care for yourself, meaning you:
- Are under a Federal, State, or local quarantine or isolation order related to COVID-19
- Have been advised by a health care provider to self-quarantine due to concerns related to COVID-19
- Are experiencing symptoms of COVID-19 and seeking a medical diagnosis
- Are seeking or awaiting the results of a diagnostic test for, or a medical diagnosis of, COVID-19 and have been exposed to COVID-19, or your employer has requested such test or diagnosis
- Are obtaining immunization related to COVID–19 or recovering from any injury, disability, illness, or condition related to such immunization
- You need to care for others, meaning you:
- Are caring for an individual who is subject to a Federal, State, or local quarantine or isolation order related to COVID-19, or has been advised by a health care provider to self-quarantine due to concerns related to COVID-19
- Are caring for your child because their school or place of care has been closed, or their child care provider is unavailable, due to COVID-19 precautions
- Are experiencing any other “substantially similar condition” specified by the U.S. Department of Health and Human Services
What benefits can you receive?
If your employer opts in:
- If you need to care for yourself (any of the reasons listed under #1 above), then you can receive:
- Up to two weeks (80 hours) of paid leave at your regular rate of pay, up to $511 per day and $5,110 total
- Plus up to 10 weeks of paid leave at 2/3 of your regular rate of pay, up to $200 per day and $12,000 total
- If you need to care for others (any of the reasons listed under #2 above), then you can receive:
- Up to 12 weeks of paid leave at 2/3 of your regular rate of pay, up to $200 per day and $2,000 total
What if you previously took paid sick leave?
If you previously took all 80 hours of paid sick leave under the 2020 Families First Coronavirus Response Act (FFCRA), good news: The clock resets on April 1, 2021. If your employer decides to participate in this program again, then you’re eligible for two more weeks of paid sick leave.
What if you’re self-employed?
Certain self-employed individuals in similar circumstances are entitled to similar credits. Visit the IRS website for more information. Note that under the American Rescue Plan Act, up to 60 days of paid family leave may now be covered, instead of 50.
Emergency federal employee leave
Through September 30, 2021, federal employees have the right to paid leave if you are:
- Subject to a Federal, State, or local quarantine or isolation related to COVID-19
- Self-quarantining due to concerns related to COVID-19
- Caring for an individual who is quarantining related to COVID-19
- Experiencing symptoms of COVID-19 and seeking a medical diagnosis
- Caring for a child because of a school or place of care closure, or the school requires virtual learning instruction or a hybrid in-person and virtual learning instruction due to COVID-19 precautions
- Experiencing any other substantially similar conditions
- Caring for a family member with a mental or physical disability who is 55 years of age or older and incapable of self-care, without regard to whether another individual other than the employee is available to care for such family member, if the place of care for such a family member is closed or the direct care provider is unavailable due to COVID-19
- Obtaining immunization related to COVID-19 or is recovering from any injury, disability, illness, or condition related to such immunization.
What does the benefit include?
- Up to 600 hours (15 weeks) of paid leave for full-time employees. For part-time or seasonal employees, you can receive an amount not to exceed the proportional equivalent of 600 hours.
- Same hourly rate as other leave payments, but weekly benefit will not exceed $1,400 a week ($2,800 per pay period).
- This is in addition to other leave provided to an employee and cannot be used concurrently with any other paid leave.
- This emergency paid leave will reduce the total service used to calculate federal retirement benefits.
- Fact sheet: “Expanding Tax Relief for Working Families”
- National Conference of State Legislatures: “American Rescue Plan Act of 2021”
- Center on Budget and Policy Priorities: “American Rescue Plan Act Will Help Restore Children’s Well-Being After Year of Widespread Hardship”
- Senator Brian Schatz: “Key provisions in the COVID-19 relief package,” “Tax relief for individuals”
- White House: “The American Rescue Plan: Impacts on Hawaiʻi”
- Prenatal-to-3 Policy Impact Center: “How Will the American Rescue Plan Strengthen
- the Prenatal-to-3 System of Care? A Summary of the 2021 Act’s Benefits for Infants and Toddlers”
- IRS: “COVID-19-Related Tax Credits for Paid Leave Provided by Small and Midsize Businesses FAQs”