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The US $ 1.9 trillion bailout plan is almost legal – meaning additional unemployment benefits for millions of workers should be on the way soon.
The Covid Relief Act, passed by the Senate on Saturday, extends unemployment benefits through Labor Day, increasing them by $ 300 per week.
The House stands ready to pass the bill on Wednesday and then send it to President Joe Biden, who is expected to sign it by the weekend. The problem is time sensitive – millions of unemployed would lose their benefits after March 14 without another renewal.
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According to the Department of Labor, more than 18 million Americans were receiving benefits in mid-February.
“The American bailout plan will soon be incorporated into law and aid will be on the way,” said Rep. John Yarmuth, D-Ky., Chairman of the House Committee on Budgets, Tuesday.
Here is what unemployed people need to know about the legislation.
Unemployment benefit extended
The bill would extend the duration of benefits offered through temporary pandemic relief programs.
Aid would end on September 6 instead of March 14, an extension of almost six months.
These programs include Pandemic Unemployment Benefits for the self-employed, giants, and other workers who are not eligible for government assistance, as well as Pandemic Unemployment Compensation, which pays the long-term unemployed extra weeks of government benefits.
The invoice would offer PUA recipients a maximum benefit of 79 weeks, from the current 50-week limit. PEUC recipients receive benefits for up to 53 weeks instead of 24.
$ 300 rise in unemployment
Beneficiaries would receive an additional $ 300 per week through September 6th.
State unemployment benefits replaced an average of 38% of pre-layoff wages in the third quarter of 2020, according to the Ministry of Labor. An additional $ 300 per week would increase this wage replacement to 74%.
Covid’s $ 900 billion aid package signed by former President Donald Trump in late December also increased benefits by $ 300 per week. This amendment has been in force since the beginning of January.
A lost wage assistance grant offered by a Trump executive also offered $ 300 per week for up to six weeks starting in August.
$ 10,200 unemployment tax break
The legislation also reduces (or eliminates) the taxes workers owe on unemployment benefits they received in 2020.
According to the Century Foundation, around 40 million people received unemployment benefits last year.
The bill waives federal taxes on the first $ 10,200 in unemployment benefits collected last year. Married couples filing a joint tax return would not be taxed on the first $ 20,400 of unemployment income.
However, states cannot waive the tax. More than half currently levy state income tax on unemployment benefits.
The federal tax break applies to individuals and married couples who had an adjusted gross income of less than $ 150,000 in 2020.