President Joe Biden has sought to quickly provide meaningful aid to help people cope with the financial impact of the coronavirus pandemic. His $1.9 trillion stimulus proposal has already made it through a House vote, and needs Senate approval to move forward. But that bill isn’t yet set in stone, and one change now on the table is setting lower income thresholds for stimulus eligibility.
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Will fewer earners be entitled to a stimulus check?
The aforementioned $1.9 trillion relief package includes a third stimulus round, this time featuring payments of $1,400 — the most generous stimulus number to date. But some lawmakers have expressed concern that the president’s proposed aid isn’t targeted enough. These lawmakers don’t want to see stimulus cash land in the bank accounts of well-off families who don’t necessarily need that money to pay for essentials. They want to direct the money to the nation’s neediest.
In the first two stimulus rounds, individuals earning $75,000 or less, heads of household earning $112,500 or less, and married couples earning $150,000 or less received a full payment. From there, those payments phased out, so some higher earners still ended up with some amount of stimulus cash.
For the upcoming round, the initial thresholds are the same — individuals earning $75,000 or less, heads of household earning $112,500 or less, and married couples earning $150,000 or less receive a full $1,400 payment. But beyond that, things get tricky.
In the House bill that recently passed, stimulus checks get cut off entirely at the following income thresholds:
- $100,000 for individuals
- $150,000 for heads of household
- $200,000 for married couples
But Biden is now on board with a plan to lower the thresholds at which stimulus payments are cut off completely. As of now, here are the new cutoff thresholds:
- $80,000 for individuals
- $120,000 for heads of household
- $160,000 for married couples
Under this plan, a lot of people who received stimulus funds under the first two rounds are not eligible in the third round. It’s also worth noting that this is a major compromise on Biden’s part. In recent weeks, he’s received pressure to make his upcoming aid package more targeted, especially in light of a declining U.S. unemployment rate. In fact, recently, the U.S. Chamber of Commerce warned that the president’s plan was too generous, and that overspending on a stimulus package would leave less money for important initiatives like infrastructure.
Of course, news of tighter eligibility may not sit well with higher earners who were, until now, looking forward to a third stimulus check. Ultimately, these lower thresholds should help ensure that those $1,400 payments go to households who need the money most.
View more information: https://www.fool.com/the-ascent/personal-finance/articles/biden-backs-lower-income-thresholds-for-stimulus-check-cutoff/