Altogether, the tax provisions in the federal stimulus package, which was passed by Congress today, are estimated by the Joint Committee on Taxation to reduce federal revenues by $605.5 billion through fiscal year 2025.

Of that reduction, $292.4 billion is from the bill’s rebate for individuals. The rebate will be $1,200 for singles and $2,400 for married couples filing jointly, plus $500 for each child. The rebates will phase out for adjusted gross incomes over $75,000 for singles and $150,000 for married couples filing jointly.

Additionally, the bill allows a credit against employment taxes for 50 percent of wages up to $10,000 (per employee) when a business is suspended or experiences a major drop in gross receipts due to COVID-19. The bill also allows employer payroll taxes to be deferred so that 50 percent of taxes due in calendar year 2020 would be paid by Dec. 31, 2021 and the other 50 percent would be paid by Dec. 31, 2022. The resulting reductions in revenue to the Social Security trust fund will be backfilled from the Treasury.

Other tax provisions include:

• Withdrawals of up to $100,000 from retirement plans will be allowed without penalty if the individual or a family member is diagnosed with COVID-19 or “experiences adverse financial consequences” due to being quarantined, being laid off, having hours reduced, or not being able to work because of lack of child care.
• Under current law, net operating losses may be deducted from income tax, but the deduction is limited to no more than 80 percent of taxable income. Generally, under the Tax Cuts and Jobs Act, losses may not be carried back. The bill passed today will allow net operating losses from 2018, 2019, and 2020 to be carried back five years. It also suspends the 80 percent limit.
• Before Jan. 1, 2021, undenatured alcohol used to produce hand sanitizer will not be subject to excise tax. This has to do with the decision of the Alcohol and Tobacco Trade Bureau to allow distilleries to produce hand sanitizer during the current crisis without additional permits.

(Previous posts on the federal bill are here, here, and here.)