New COVID-19 Relief Bill
Last night, the U.S. Senate and House of Representatives overwhelmingly passed a $900 billion COVID-19 relief bill that provides more than $300 billion in aid for small businesses, $600 stimulus payments to individuals, adds $300 to extended weekly unemployment benefits, and clarifies tax ramifications for PPP loan recipients. President Trump is expected to sign the COVID-19 stimulus bill today.
Key Provisions in the Bill Include
$325 Billion in Aid for Small Businesses. The bill provides more than $284 billion to the SBA for first and second PPP forgivable small business loans and allocates $20 billion to provide Economic Injury Disaster Loan (EIDL) Grants to businesses in low-income communities. In addition, shuttered live venues, independent movie theaters, and cultural institutions will have access to $15 billion in dedicated funding.
Tax Deductibility for PPP Expenses. Business expenses paid with forgiven PPP loans are tax-deductible. This supersedes previous IRS guidance that such expenses could not be deducted.
PPP2 Loans. Some PPP recipients may be able to apply for another loan of up to $2 million, provided they have 300 or fewer employees, have used or will use the full amount of their first PPP loan and can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
Business Tax Benefits. The bill extends the employee retention tax credit and several expiring tax provisions and temporarily allows a 100% business expense deduction for meals (rather than the current 50%) as long as the expense is for food or beverages provided by a restaurant. This provision is effective for expenses incurred after December 31, 2020, and expires at the end of 2022.
$600 Payment for Most Americans. $166 billion is allocated for economic impact payments of $600 for individuals making up to $75,000 per year and $1,200 for married couples making up to $150,000 per year, as well as a $600 payment for each child dependent.
Unemployment Benefits. $120 billion to provide workers receiving unemployment benefits a $300 per week supplement from December 26 until March 14, 2021. This bill also extends the Pandemic Unemployment Assistance (PUA) program, and the Pandemic Emergency Unemployment Compensation (PEUC) program.
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