H.R. 133-Consolidated Appropriations Act of 2021

We just received news that the president has signed the proposed budget/stimulus bill which contained a number of changes we want you all to be aware of.


H.R. 133-Consolidated Appropriations Act of 2021


Congress just passed another bill that includes some major tax changes in addition to the direct stimulus payments.  Whether you are an individual or business, you’ll want to pay close attention to this letter.  Although not comprehensive, here are some of the key changes.


  • Second Stimulus Check: Taxpayers could be eligible for an additional $600 per taxpayer and dependent. Individuals eligible for the payment include single taxpayers with Adjusted Gross Income under $75,000, and married couples filing joint under $150,000. The bill sets a deadline for these additional stimulus checks to go out by January 15th, anyone that does not receive a stimulus check that qualifies can claim it on their tax return as a refundable credit.
  • 2020 Earned Income Tax Credit: Taxpayers can use either 2019 or 2020 earned income in calculating their 2020 EITC.
  • Lifetime Learning Credit: The adjusted gross income phase-out floor will increase after 2020. This means more students could qualify for the credit on their 2021 return.
  • Work Opportunity Credit: Extended through 12/31/25.
  • Personal Residence Debt Forgiveness Exclusion: Extended through 12/31/25.
  • $5,250 Employee Student Loan Fringe Benefit: Extended through 12/31/25.
  • Solar Energy Credits: Extended at their current 26% and 22% rates through 2023.
  • Mortgage Insurance Premium Deduction: Extended through 2021.
  • Alternative Fuel Credit (Includes Electric Car Charges): Extended through 2021
  • Retirement Provisions: The three year rollover rule for Covid-related waiver of penalty on early distributions is extended for distributions taken before 2/21/2021
  • Business Meal Deduction: The new law allows for a 100% deduction for qualifying business meals at a restaurant for tax years 2021 and 2022.
  • Charitable Contributions: The $300 non-itemizer charitable deduction is increased to $600 in 20201. The law extends the 100% Adjusted Gross Income limit on charitable deductions claimed on schedule A (Itemizers) through 2021
  • 7-½ % Adjusted Gross Income Reduction on Medical Expenses: The new law makes the 7-½ % limit permanent.


PPP Loans, Eidl Grants and Loans, and Wage Credits


  • New PPP Loans are available if business revenue dropped more that 25% in any one quarter during 2020, as compared to the revenues during the comparable quarter in 2019. This only applies to employers with less than 300 employees.  The maximum loan is $2,000,000, and the employer must have exhausted all prior PPP loan proceeds.
  • Allows full deduction for all expenses paid with PPP loan proceeds. This essentially means all PPP loan debt forgiveness is tax free.
  • All PPP loans under $150,000 are eligible for simplified forgiveness calculation.
  • All EIDL grants and loan forgiveness are totally tax free.
  • The $10,000 EIDL grants no longer reduce PPP loan forgiveness.
  • The Retention, FMLA (Family Leave) and Sick Pay Credits have many changes and extensions. Contact us for more details.