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Senate passes COVID relief legislation with changes to House-approved bill

March 2021


The Senate on March 6 passed by a vote of 50 to 49 a Senate substitute amendment to the COVID relief legislation that made certain changes to the House-passed budget reconciliation bill (H.R. 1319, the American Rescue Plan Act of 2021). The final vote came Saturday afternoon after an all-night session in which a number of additional amendments were considered.

Like the House-passed bill, the Senate legislation reflects COVID relief measures proposed by President Biden, including additional $1,400 economic recovery impact payments to eligible individuals, funding for vaccine distribution, refundable tax credits, expanded unemployment benefits, and $350 billion in aid to state and local governments. Additional tax provisions include an extension of the employee retention tax credit and a proposal repealing a long-delayed worldwide interest allocation election that was set to be effective in 2021. 

Senate changes to the House-passed bill include removing a provision increasing the federal minimum wage to $15 per hour that the Senate parliamentarian has ruled a violation of budget reconciliation rules; modifying the eligibility requirements for the $1,400 per person direct economic impact payments as well as the amount and timing of enhanced weekly federal unemployment benefits; and adding a provision to expand the scope of the $1 million deduction limit for public corporations under Section 162(m). 

The House this week is expected to vote on the Senate amendment, which would clear the measure to go to the White House and be signed into law by President Biden. Democratic leaders have set a goal of completing action on a COVID-19 relief package by March 14, when the current extension of enhanced federal unemployment insurance (UI) benefits is set to expire.

Action item: The swift action by Congress to pass the American Rescue Plan legislation will allow President Biden to pivot to his ‘Build Back Better’ economic recovery plan. Companies should be evaluating actions they may want to consider in anticipation of Congress using a second budget reconciliation bill to advance an economic recovery plan that may include significant tax increase proposals affecting corporations, investments, and individuals.

The takeaway

If the House this week passes the Senate version of the COVID-19 relief legislation as expected, President Biden will be able to sign the measure into law and achieve the first major legislative goal of his presidency. While President Biden and the Democratic-controlled Congress have been successful thus far in using budget reconciliation procedures to advance significant legislation, the negotiations that were needed to reach agreement among Senate Democrats illustrate the difficulty Democrats will continue to face in maintaining unity with slim Congressional majorities.

Assuming Democrats remain united in the House and the Senate, taxpayers should be preparing not only for changes that would be made by the American Rescue Plan legislation, but also for potential ‘Build Back Better’ economic recovery legislation with tax increases that could be included in a second reconciliation bill later this year. 

The second reconciliation bill could propose increases in tax rates for corporations and high-income individuals, international tax law changes, and other revenue-raising measures. With potential tax-increasing legislation one step closer to consideration, taxpayers should model and plan for proposed changes and engage with policymakers now to communicate their potential impact on jobs and business operations.

Contact us

Pat Brown

Pat Brown

Washington National Tax Services Co-Leader, PwC US

Rohit Kumar

Rohit Kumar

Washington National Tax Services Co-Leader, PwC US

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