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American Rescue Plan Act: Benefits for Children & Families

March 24, 2021

On March 11, President Biden signed the $1.9 trillion American Rescue Plan Act into law, providing much-needed, immediate financial relief for children and families struggling from the impacts of COVID-19. This historic legislation serves as a beacon of hope—especially for children and families of color—who have been disproportionately impacted by the pandemic as a result of economic and racial injustices that have continued to leave them marginalized.

Children and families will benefit from the American Rescue Plan Act given its significant provisions, including some of the following:

• A one-year expansion of the Child Tax Credit (CTC). Families will receive $3,600 per child under age 6 and $3,000 per child age 6 to 17, paid out in periodic installments beginning in July for one year. This change to the CTC expands full eligibility to 23 million children who previously did not benefit fully from the program because their families earned too little. This single provision accounts for the vast majority of the poverty-fighting effect of the bill, and its impact on racial disparities in poverty are even more dramatic. This change would cut poverty for Black children by 52 percent, by 45 percent for Hispanic children, and by 61 percent for Indigenous children. The inclusion of this robust expansion of the CTC is a critical step forward in making a guaranteed monthly child allowance permanent.
• A third one-time direct cash payment. Adults earning up to $75,000 and married couples earning up to $150,000 are eligible for the full $1,400 direct payment each and $1,400 for each dependent. This bill expands eligibility to mixed status households and to adult dependents who were left out of previous relief.
• $40 billion in long over due and much needed funding for child care—the most significant investment in the sector since World War II. This funding includes a $25 billion emergency stabilization fund and an additional $15 billion in funding for the Child Care and Development Block Grant (CCDBG) program to ensure child care providers can safely operate, increase pay and benefits of child care workers, and reduce child care costs for families. This funding will help stabilize the sector and protect high-quality child care that is essential for our children, families, and economy.

• An expansion of affordable health coverage. The bill includes an expansion of  the Affordable Care Act’s (ACA) premium subsidies so no one will pay more than 8.5 percent of their household income on the standard, benchmark plan. These affordability changes are estimated to reduce the number of uninsured by at least 1.3 million by next year.
• Supports to help families avoid housing insecurity, homelessness, or foreclosure. The bill includes $27.4 billion for rental assistance, $10 billion for homeowner assistance, $5 billion in Section 8 housing vouchers, $5 billion in homelessness assistance, and $5 billion in utility assistance to help families struggling to pay their rent, mortgage, or utilities during this crisis. Notably, the bill also sets aside $800 million under ESEA funds to provide wraparound services for students experiencing homelessness. 

• An expansion of nutrition assistance including an extension of the 15 percent SNAP benefit increase through September 30, 2021; additional funding for SNAP online purchasing and administrative support; $880 million in additional funding for WIC including four months of increased benefits; and an extension and expansion of Pandemic-EBT through this summer and beyond. 
• $170 billion in funding to ensure schools and higher education institutions can operate safely and support students. The funding will be used to address learning loss and student trauma; reduce class sizes and modify spaces; modernize HVAC systems; provide personal protective equipment; and hire more school custodians, murses, and counselors.
• $350 million in funding to support families and prevent child abuse. This funding includes $100 million for CAPTA Title I for grants to support state child protective services programs and infrastructure as well as $250 million for CAPTA Title II for funding directly to communities to provide community-driven services to support and strengthen families so children can remain safe. 

• An expansion of the Earned Income Tax Credit (EITC). The bill increases the maximum tax credit for childless workers and expands eligibility to young workers ages 19-24 who are not full time students and workers over age 65. This will put money in the pockets of 17 million low-income workers and will especially benefit cashiers, food preparers, servers, and home health aides. 
• An extension of unemployment insurance (UI) benefits. The bill adds an additional benefit of $300 per week through September 6, 2021. It also makes the first $10,200 in UI received in 2020 non-taxable for households with incomes under $150,000.
• An extension of voluntary paid leave tax credits from March 31, 2021 to September 30, 2021, with additional purposes allowed for longer-term paid family leave to match all the purposes for shorter-term paid sick leave, including personal health and family caregiving, plus caring for a child whose school or child care has closed.  The bill also:
  • Resets the clock on March 31, 2021 so that those who took leave in the past year can take leave again;
  • Increases the total amount of wages an employer can claim the credit in a year;
  • Allows credits for an employee who is receiving or recovering from the side effects of a vaccine; and
  • Prevents employers from claiming the credit if they make leave available in a manner that discriminates in favor of highly compensated employees, full time employees, or based on employment tenure with employer. 
• $1 billion for the Pandemic Emergency Fund to provide states, tribes, and territories resources to help families meet their needs. The allocation would fund Non-Recurrent Short-Term (NRST) cash and other NRST benefits. The bill requires states to make prompt expenditures and unused funds would be reallocated among states.  
• $150 million in funding for Maternal, Infant, and Early Childhood Home Visiting (MIECHV) programs to ensure families that are pregnant or recently had children have the resources they need to promote their children’s healthy development. 
• $10 million to establish a National Technical Assistance Center on Grandfamilies and Kinship Families to provide training, technical assistance and resources for government programs, nonprofits, and other community-based organizations, Tribes, and Tribal organizations that serve grand families and kinship families. The center will provide assistance to programs and organizations supporting relatives raising children and will engage experts to stimulate development of new evidence-based, equitable, and culturally appropriate practices for serving kinship families and to support implementation of those practices.
• Funding for COVID-19 testing, vaccines, and supplies including $7.5 billion for the CDC to track, administer, and distribute COVID-19 vaccines; $46 billion for diagnosing and tracing COVID-19 infections; and $2 billion for buying and distributing testing supplies and personal protective equipment. The bill also: 
  • Requires Medicaid and CHIP coverage of COVID-19 vaccines and treatment without beneficiary cost sharing; 
  • Provides HHS with more than $9 billion in funding for public health workforce-related support; and
  • Provides additional resources for federal, state, and local prisons, jails, and detention centers to prevent the spread of COVID-19 including funding for supplies and mitigation strategies, vaccines, and safe reentry for people returning to local communities.
• A new option for states to extend postpartum Medicaid and CHIP coverage for one year after the end of pregnancy. By ensuring states can receive federal matching funds to extend postpartum coverage beyond the current cutoff of 60 days, this option is critical in responding to the alarming maternal mortality crisis in the US that is especially placing Black women at risk.
• An increase of Medicaid FMAP from 7 percent to 10 percent for home- and community-based services (HCBS) which provide important health care, especially for older adults and people with disabilities, and will reduce the pressures on unpaid family caregivers allowing many to return to work, especially women of color who were disproportionately pushed out of the workforce due to caregiving challenges throughout the pandemic.
• A provision to make tax-free any student loan forgiveness passed between December 31, 2020 and January 1, 2026 rather than have forgiven debt be treated as taxable income. 

For more information about the American Rescue Plan Act, visit the U.S. Department of the Treasury.