Fewer Americans will get a third stimulus check under a new plan passed by the Senate on Saturday. The new proposal was adopted to pull together Democrats in the Senate, who were divided over the stimulus check phase-out rate, so that they could get the 50 votes needed to pass President Biden’s $1.9 trillion COVID-relief package. The House of Representatives previously passed the president’s stimulus package, but they will now have to vote on the massive bill again because of this and other changes made by the Senate.
Because the Senate is split – 50 Democrats and 50 Republicans – Senate Democrats couldn’t afford to lose any votes in order to pass the president’s stimulus package, since no Republicans were expected to vote for it. (In the case of a tie, Vice President Kamala Harris casts the deciding vote.) However, led by Sen. Joe Manchin (D-W.Va.), a handful of moderate Democrats in the Senate successfully pushed for the stimulus check plan to be more “targeted” to people who need assistance the most. In other words, those Senators argued that people with higher incomes should not receive a stimulus check.
As a result, under the current bill (as amended by the Senate), the third stimulus check for people with an income above a certain amount will be reduced – potentially to zero – at a faster rate than proposed under the bill passed by the House. According to the Institute on Taxation and Economic Policy, that means almost 12 million fewer American adults will receive a third stimulus check under the current bill than under the House-passed version. Will you be one of them?
[Note: We’ve updated our Third Stimulus Check Calculator to account for the Senate’s new phase-out rates. Check it out to see how much money you would get under the new plan.]
Stimulus Check Plan Passed by the House
On February 27, the House passed their version of the bill that is being used to usher the president’s stimulus package through Congress. Like the current bill, that legislation authorized another round of $1,400 stimulus checks for each eligible person ($2,800 for couples), plus an additional $1,400 for each dependent. However, as with the first- and second-round payments, the third-round stimulus checks would be reduced – or eliminated – for people with an income above a certain amount.
Under the House-passed bill, if you filed your most recent tax return as a single filer, your third stimulus check would start to be “phased-out” (i.e., reduced) if your adjusted gross income (AGI) is $75,000 or more. That threshold would jump to $112,500 for head-of-household filers, and to $150,000 for married couples filing a joint return. Your third stimulus check would be reduced by $56 for each $1,000 of AGI above the applicable threshold. So, under the bill originally passed by the House, third-round stimulus checks would be completely phased out for single filers with an AGI above $100,000, head-of-household filers with an AGI over $150,000, and joint filers with an AGI exceeding $200,000.
Senate’s New Phase-Out Rate
Under the new plan passed by the Senate, the stimulus check phase-out thresholds would not change. So, if it’s finalized, you would still get a full payment if your AGI is below the applicable amount for your tax return filing status: $75,000 for single filers, $112,500 for head-of-household filers, and $150,000 for joint filers.
However, the phase-out rate under the Senate plan is supercharged. Instead of $56 for each $1,000 of AGI above the applicable threshold, stimulus checks under the Senate bill will be reduced by $280 for each $1,000 of AGI above the threshold amount. That’s five times the rate applied under the House bill.
As a result, single filers with an AGI above $80,000 will not get any third stimulus check money under the current bill passed by the Senate. Under the House version, the phase-out for single filers wasn’t complete until $100,000 of AGI. That means single people with an AGI between $80,000 and $100,000 are shut out under the Senate plan, but they would still get something under the bill originally passed by the House.
For head-of-household filers, the point at which a third stimulus check would be reduced to zero drops from $150,000 to $120,000. So, head-of-household filers with an AGI between those two amounts lose out under the bill passed by the Senate.
The cut-off point for married couples filing a joint return under the Senate bill is $160,000. It’s $200,000 under the House bill. As a result, joint filers with an AGI between $160,000 and $200,000 won’t get a stimulus check under the current bill, but they would have under the House version.
Again, you can use Kiplinger’s Third Stimulus Check Calculator to see how much YOU would get under the current bill, as amended in the Senate.
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Source: kiplinger.com