March 15, 2021

U.S. COVID Relief Bill Includes Business Tax Increases

President Joe Biden signed a $1.9 trillion COVID-19 relief package into law on March 11. According to Yahoo Finance, the legislation includes $60 billion tax increases that could impact both corporate tax filers and small businesses that file as individuals.

These provisions:

  • Extend the Section 461(l) limitation on excess business losses of noncorporate taxpayers for one year, through 2027;
  • Repeal Section 864(f), which allows affiliated groups to elect to allocate interest on a worldwide basis; and
  • Take away deductions for publicly traded companies that pay top employees more than $1 million.

Click here to read more about the tax provisions in the relief bill.

The legislation also includes provisions to:

  • Add $15 billion in new funding for Targeted Emergency Injury Disaster Loan grants to provide hard-hit, underserved small businesses with increased flexible grant relief;
  • Extend the Employee Retention Tax Credit (ERTC) through December 31, 2021 and expand it by allowing certain severely distressed businesses to claim the credit for a greater share of employee wages and by allowing the credit to cover newly formed businesses;
  • Extend the paid sick and Family and Medical Leave Act tax credits created in the Families First Coronavirus Response Act of 2020 through September 30, 2021;
  • Send checks of up to $1,400 to most Americans;
  • Extend pandemic-related unemployment benefits and create a $10,200 tax exclusion for unemployment compensation income for tax year 2020 for households with incomes under $150,000;
  • Provide $7.5 billion for vaccine distribution, $48.3 billion for testing and contact tracing, and $10 billion to expand domestic production of personal protective equipment (PPE), vaccines, and other medical supplies;
  • Provide $125 billion for public K-12 schools to safely reopen for in-person learning, address learning loss, and support students as they work to recover from the long-term impacts of the pandemic; and
  • Give $10 billion to state governments to set up programs that can leverage billions of dollars in private capital for low-interest loans and other investment to help entrepreneurs and the small business economy rebound from this crisis.

Click here to read a full description of the bill.