During the peak period of the COVID-19 pandemic, the federal government released a series of stimulus checks beginning with a $1,200 stimulus check under the CARES Act. In one of the most successful initiatives taken by successive federal administrations, a total of $1.5T was sent to people across the nation through the Economic Impact payments, tax refunds, and the enhanced advance Child Tax Credit stimulus checks.
Even as the first wave of the pandemic hit America in January 2020, the administration passed the CARES act that included a provision for the first round of stimulus payments. Eligible income tax-paying adults received a stimulus check of up to $1,200 while eligible dependents below 16 years received a $500 additional payment for up to 3 dependents.
Anyone earning below the income limits was given payments that were linked to the Adjusted Gross Income. Individuals earning below $75,000 receive the full value of the check which is reduced in a tapered fashion up to $99,000. For married couples filing jointly, the corresponding values are $150,000 and $198,000.
Three Successive Federal Stimulus Checks Have Exhausted The Federal Treasury
The first round of stimulus checks hit the bank accounts of citizens over the weekend of 11-12 April 2020. The initial payments went through direct transfer to accounts mentioned by filers in their tax returns. People also received their payments through individual bank accounts, paper checks sent through the US Postal Service, prepaid debit cards, and the Economic Impact Payment Card, send in late May and June 2020.
The next round of stimulus checks was a $900B package and was part of the Coronavirus Response and Relief Supplemental Appropriations Act, 2021. It was signed by then-President Donald Trump on 27 December 2020. It provided a one-time check worth $600, plus an additional stimulus check for child dependents aged up to 16 years. Individuals with earnings below $75,000 in the 2019 tax file received the full amount of the second round of stimulus checks.
The amount gradually decreased for those with higher annual income and phased out totally at an AGI of $87,000 for individuals. The payments under the second round were issued between 29 December 2020 and 15 January 2021.
People who missed out on the stimulus checks either under the CARES Act or the December COVID-19 Relief Act could later claim the amount retroactively when they filed their federal tax returns for 2020 through the IRS Recovery Rebate Credit.
Third Round Of Stimulus Check Most Beneficial
The third round of stimulus checks was passed by President Biden under the American Rescue Plan Act of 2021. It was the biggest stimulus payment in US history and the third stimulus check was only a part of the total plan.
The $1.9T Rescue Plan was signed by President Biden on 11 March 2021. It provided a direct Economic Impact Payment of $1,400 to individual tax filers while married couples filed jointly received a maximum of $2,800.
In addition, families with dependents received an identical amount of $1,400 regardless of the age of the dependent. This is different from the previous stipulation for dependents which was 16 years maximum. There was also no limit on the number of dependents that a family could declare.
The third round of the stimulus checks began to be transferred within hours of President Biden signing the bill. 164 million payments went through direct deposit for a total value of around $386B into individual bank accounts.
Citizens also received their payments on 13-14 March 2021. The payments continued throughout the year and also included plus-up payments and stimulus checks that were sent as additional payments to the third stimulus check whenever any short payments were noted in the third stimulus check amount.
Shift From Federal Stimulus Checks To State Relief Payments
Congress has all but stopped any mention of a third stimulus check, even as the unemployment rate saw a marginal improvement in the last two quarters of 2021. There was a marked recovery in the economy but all this was negated when inflation hit in the first quarter of 2022.
The inflation rate rose to as much as 8.5% in March and prices of gasoline and essential items went through the roof.
The federal payments were lifesavers for many families, it allowed them to stock up on necessities during one of the most uncertain of times in a century. States have moved in at this critical juncture. Most states are sitting on the federal funds they received under the American Rescue Plan Act. Moreover, the states experienced a good year as tax collection was high in the last two quarters of 2021 as the economy experienced a brief turnaround.
11 states have already pledged to support their residents. California was the first off the mark with the Golden State Stimulus Checks I and II. Now its residents may receive a $400 gas card per vehicle with a limit of 2 cards per family. The cards could be issued in July.
The Georgia revenue department has stated that residents who have filed their income tax returns for 2020 and 2021 will receive a $250 stimulus check as individual tax filers. Joint filers will receive double that while heads of households will receive $375.
Residents of Hawaii earning below $100,000 will receive a $300 stimulus check while those earning above that will receive a $100 check.
Gov. Brad Little of Idaho has approved a bill to provide residents with a 2% rebate on their 2020 income tax returns subject to a minimum of $75 per individual. People who have updated their bank accounts with the tax authorities will be the first to receive the stimulus check.
Indiana’s residents who have filed their 2020 returns before January 2022 will receive a $125 stimulus check as individuals and double that as a married couple who file jointly.
The governor of Maine, Janet Mills has signed a bill that provides a one-off payment of $850 to full-time residents of the state earning less than $100,000.
Governor Phil Murphy has approved a one-off stimulus check of $500 to residents. The money will go to people who filed returns using a tax identification number and not a social security number.
Residents of New Mexico will receive a $250 payment for filers who earned less than $75,000 while it is $500 for joint filers.
Governor Kathy Hochul has enacted a budget relief plan giving relief on property f up to $970 and a suspension of the $0.16 gas tax till the end of 2022.
Virginia has proposed eliminating the grocery tax in the state which is at present 2.5%. It has also proposed suspending the 26.2 cents per gallon on gas for a year.