American Rescue Plan Act (ARPA)

Business Tax Provisions

• The funding for the Paycheck Protection Program has been increased. However, the application period has not been extended and remains March 31, 2021. The new law also adds nonprofit entities to the list of institutions eligible for PPP loans.

• The Employee Retention Credit (ERC) which was enhanced by the CAA passed in December is further extended from June 30, 2021 through December 31,2021. Considering the extensions by both the CAA the ARPA, an employer could count up to 40,000 for 2021 per eligible employee eligible wages for the credit.  The maximum credit is 70% of eligible wages.  However, the credit per quarter may not exceed the employment taxes on wages claimed for Medicare taxes only.

• The ARPA extends the sick and family leave originally enacted by the Families First Coronavirus Response Act until September 30, 2021, increasing the limit on the credit for paid family leave to $12,000 per employee.

• Approximately $28.6 billion has been appropriated towards available Restaurant Revitalization Grants through the SBA for eligible restaurants, food trucks and similar businesses. The amount received will be treated as tax exempt income and cannot exceed $10 million per restaurant group and $5 million per restaurant location.

• The ARPA also increased the amount of exclusion from taxable wages for dependent care assistance from $5,000 to $10,500 for married couples filing jointly for the year 2021 only.

• The limitation of excess business losses by noncorporate taxpayers originally provided by the CARES Act was extended one year to the end of 2026.