House Approves Second Stimulus Package

On May 15, 2020 the House voted to approve a $3 trillion, 1800-page second stimulus package named the Health and Economic Recovery Omnibus Emergency Solutions Act (HEROES Act). This Bill would include allowing a deduction for the qualifying expenses paid with PPP loan proceeds, a second round of stimulus payments to individual Americans, and would extend the unemployment $600 weekly increase until January 31, 2021, among other important provisions.

It is anticipated that the Senate will not consider the bill as it stands today, and President Trump has stated that although he is open to a second stimulus package, he will veto the bill as it is currently written. It is likely that a second package will happen, but it will require ongoing negotiations between Democrats and Republicans to find common ground. The President and Congress have acknowledged the need for additional aid to stave off further weakening of the economy, but not all agree on the timing of the package.

The current version of the Heroes Act, H.R. 6800 includes the following provisions:

•  Suspending the tax law’s $10,000 cap on state and local tax deductions for 2020 and 2021
•  Clarifying that emergency aid to students isn’t subject to tax
•  Providing $500 billion in aid to states, $375 billion to local governments, $20 billion for tribes, and $20 billion to territories
•  Giving states $90 billion in education grants
•  Providing a second round of virus relief payments to Americans, up to $6,000 per household
•  Expanding a retention credit created in the CARES Act (Public Law 116-136), allowing businesses to claim up to 80% of an employee’s wages for the credit, up from 50%
•  Overriding the CARES Act’s net operating loss carryback provision, limiting it to 2018 and 2019
•  Increasing earned income tax credit payments for those without children, to $1,487 from $538
•  Extending a $600 weekly increase to unemployment insurance until Jan. 31
•  Allowing businesses that receive Paycheck Protection Program loans to defer payroll tax payments and to deduct payroll, rent, and other business expenses covered by the loans
•  Opening up PPP loans to nonprofits of all sizes
•  Extending a refundable tax credit to subsidize paid sick and family leave during the crisis and expands eligibility

We will continue to keep you updated. Should you have any questions, please don’t hesitate to reach out to your tonneson + co representative.