by Megan Roberts, Extension educator
Congress passed its latest (and possibly last) major COVID-19 relief package on Wednesday, March 10. H.R. 1319, also known as the American Rescue Plan Act, was signed into law by the president on Thursday, March 11. This law comes nearly a year to the day after the first COVID-19 stay-at-home orders began and a year after Congress passed its first major COVID-19 relief law on March 6, 2020.
Although not a comprehensive summary of the $1.9 trillion legislative package, this blog post does highlight several sections of potential interest to farmers, other small business owners, and agricultural professionals. Title I of the law focuses on funding for the United States Department of Agriculture (USDA) and is separated into two subtitles: agriculture and nutrition. Title V involves modification of small business relief programs, including minor changes to the Paycheck Protection Program (PPP), Economic Injury Disaster Loans (EIDL), and Targeted EIDL Advances. Lastly, Title IX involves Treasury appropriations, such as unemployment benefits and individual tax credits and rebates, including a third round of economic stimulus checks to individuals and families.
Agricultural and nutrition
With 2021 bringing commodity price increases and reduced agricultural supply chain disruptions, it can be noted that this law shifts away from ad-hoc commodity payments. USDA issues ad-hoc payments outside of normal existing long-term farm safety net programs; the Coronavirus Food Assistance Programs (CFAP 1 & 2) were defined as ad-hoc. Instead of ad-hoc payments in this law, hunger relief via commodity buying and food assistance is the majority of USDA appropriations (Title 1). Addressing racial inequity and inequality in agriculture is also a focus the American Rescue Plan.
Although the American Rescue Plan does not have an agricultural commodity ad-hoc payment program, we are still awaiting the $11 billion implementation of “CFAP 3,” which was funded via the previous COVID-19 relief package passed in late December 2020. At present, we simply do not know exact specifics of what CFAP 3 will look like or when it will be administered. Nor do we know the deadline for the review of CFAP 1 and CFAP 2 additional assistance program. In addition to the $11 billion earmarked for CFAP 3 in December, another $2 billion to various USDA agricultural programs was authorized in the previous law and is awaiting disbursement.
For the American Rescue Plan, Congress divided their appropriations to agriculture in subtitle A into seven categories. Nutrition appropriations are divided into eight categories in subtitle B. For ease, I’ve summarized the agricultural and nutrition appropriations by section.
Subtitle A, Section 1001
- $3.6 billion to food/ag commodity purchasing and distribution, as well as loans and grants to “small and midsized food processors or distributors, farmers markets, producers, or other organizations” and to support of food chain resiliency.
- $300 million for animal disease monitoring, and $100 million to reduce administrative costs to small and very small USDA inspected establishments.
Subtitle A, Section 1002
- $500 million via USDA’s Rural Development agency for emergency grants for rural health care.
Subtitle A, Section 1003-4
- $47.5 million to administer pandemic programs at USDA, as well as $2.5 million for COVID-19 related program oversight at USDA.
Subtitle A, Section 1005
- $4 billion to make qualifying payments of 120 percent of outstanding farm loan debt to a socially disadvantaged farmer or rancher. There are two types of government loans that qualify: (1) a USDA direct farm loan to a socially disadvantaged farmer or rancher; and/or (2) a farm loan guaranteed by the USDA and held by a socially disadvantaged farmer or rancher.
Loans qualifying for payment relief must be already existing as of January 1, 2021. In other words, loans made after January 1, 2021 do not qualify for this debt relief.
The law does not appropriate a specific amount of funding to this section, but the Congressional Budget Office estimated the cost of implementing this debt relief at around $4 billion.
Subtitle A, Section 1006
- $1 billion to fund outreach, improve land access, address the heirs’ property issues, support new lending institutions and provide legal aid to socially disadvantaged farmers, ranchers and groups.
Subtitle A, Section 1007
- $800 million to the Commodity Credit Corp for special acquisition and redistribution of commodities via grants as prescribed by the Food for Peace Act Title II.
Subtitle B, Section 1101
- $1.15 billion to increase access to supplemental food nutrition assistance (SNAP) program benefits at 115 percent of the previous plan value.
This provision continues the increased benefit amount at the same level as allocated in the Consolidated Appropriations Act, 2021, but extends the date through September 30, 2021. The appropriation for SNAP also includes funding for expenses at the USDA for additional administration and oversight costs.
Subtitle B, Section 1102-1104
- $25 million for improving SNAP online and electronic benefit transfer technology (Section 1102).
- $1 billion to provide grants for nutrition assistance to Puerto Rico, American Samoa, and the Commonwealth of Northern Mariana Islands (Section 1103).
- $37 million for the Commodity Supplemental Food Program (Section 1104).
Subtitle B, Section 1105-1108
Sections 1105-1108 expand child nutrition programs, including increasing Women, Infants and Children (WIC) benefits, providing funds for improved WIC outreach and innovation, temporarily increasing eligibility for meal reimbursements at emergency shelters and for at-risk school children from age 18 to 25, and extending the Pandemic Electronic Benefit Transfer program (P-EBT) to any school year or subsequent summer session in which there is a public health emergency designation. The law does not appropriate a specific amount of funding to two of these sections (1107-1108), but the Congressional Budget Office estimated the total cost of the WIC and child nutrition program expansions at around $6.6 billion (Sections 1105-1108).
Small business program relief
The modification of Small Business Administration (SBA) programs continues, and this law brings more changes to the Paycheck Protection Program (PPP) and Economic Injury Disaster Loans (EIDL). However, compared to December’s Consolidated Appropriations Act, 2021, the SBA changes in this law are relatively minor for those in agriculture. Title V implements the changes to SBA including an additional $7.25 billion for PPP and increased eligibility for non-profits (Section 5001), an additional $15 billion for targeted EIDL advance grants for severely impacted small businesses of less than 10 employees (Section 5002), $28.6 billion for a newly funded program for restaurants and food establishments (Section 5003), $175 million for community navigator programs related to accessing funding (Section 5004), an additional $1.25 billion in funding to the shuttered venues grant (Section 5005), and $840 million to SBA to administer programming related to COVID-19, as well as $460 million to administer 7(b) disaster loans (Section 5006).
The $1.25 billion in additional funding to the shuttered venues grant is on top of the $15 billion funded in the Consolidated Appropriations Act, 2021. While a narrow segment of the agricultural industry, farms with agritourism or on-farm eating establishments affected by COVID-19 may wish to explore this well-funded grant if they have not already accessed PPP.
Individual tax relief
While not specifically related to ag business management, let's talk about individual tax relief. Most Americans, including farmers, can expect a third round of COVID-19 stimulus checks. “Recovery rebate” payments are $1,400 per individual, with an additional $1,400 allocated per dependent (Title IX, Subtitle G, Part 1, Section 9601). Dependents may be adults. While these stimulus payments are larger than were issued in April and December 2020, the phase-out based on Adjusted Gross Income (AGI) is much faster this time around. For example, for an individual filer, the stimulus payment begins to be reduced at an AGI of $75,000 and is eliminated at an AGI of $80,000. Your AGI is based on 2019 if you have not yet filed your 2020 taxes. If you have filed your 2020 taxes, your AGI is based on the 2020 tax year.
Congress increased 2021 child tax credits to “$3,000 ($3,600 in the case of a qualifying child who has not attained age 6 as of the close of the calendar year in which the taxable year of the taxpayer begins)” and the age for 2021 eligibility increased from children under 17 to children under 18 at year end (Part 2, Section 9611). Like the stimulus checks, the child tax credit increase is phased out for households with higher AGIs. Advance payments of the child tax credit are now available (Section 9612). Child tax credits are fully refundable in 2021, meaning you can generate a credit in excess of tax liability.
For those that use the earned income tax credits, changes were made to strengthen the 2021 credit, in particular for taxpayers without qualifying children and those not previously meeting the prior defined age requirements (Part 3, Section 9621-26). Taxpayers as young as 19 may qualify and there is no age limit in 2021 under the change.
Business tax credits
Congress extended use of the Families First Coronavirus Response Act paid sick time and paid family leave tax credits from March 31 to September 30 (Title IX, Subtitle G, Part 5, Section 9641-43). The credits are available for qualifying small businesses to provide qualifying COVID-19 related paid time off to employees and/or owners. Providing paid time off to receive a vaccine is also now allowed under these credits. Further, Congress reset the limit on the number of sick-leave days. According to the Budget Committee, “the current ten-day limitation runs from the start of the credits in 2020 through March 31, 2021. The new ten-day limitation applies to sick days after March 31, 2021. For self-employed individuals, the ten-day limitation resets on January 1, 2021.” The tax credits are available for optional qualifying COVID-19 paid sick and family leave, but the mandatory requirement for small businesses to offer COVID-19 paid leave expired as December 31, 2020.
The Employee Retention Credit also underwent further changes in this law (Part 6, Section 9651). Congress extended the retention credit provision “through December 31, 2021 [and] modifies the credit such that, beginning after June 30, 2021, the credit will be structured as a refundable payroll tax credit against the hospital insurance tax.”
In conclusion
This summary does not comprehensively cover all aspects of the new 600+ page law. In addition to the provisions summarized here, the law includes everything from vaccine funding to expanded mental health resources to housing protection and wildlife disease research. The intent of this blog is simply to provide a brief overview of provisions of possible interest to agriculture and food businesses. Expect more details as additional rules from federal agencies are finalized in the coming weeks and months.
This article is educational in nature and not legal or tax advice. With any new legislation, interpretation of the text may change as additional rules are finalized at the agency level.
Notes and sources
According to the American Rescue Plan, the term “socially disadvantaged farmer or rancher” has the meaning given to the term in section 2501(a) of the Food, Agriculture, Conservation, and Trade Act of 1990 (7 U.S.C. 2279(a)). In summary, farmers identifying as Black, Indigenous and/or Persons of Color qualify if they hold the specific qualifying USDA farm loans as of January 1, 2021.
For the economic recovery rebates, for a joint return the phase out begins at $150,000 (eliminated at an additional $10,000), and for a head of household the phase out begins at $112,500 (eliminated at an additional $7,500) (Section 9601).
Depending on eligibility requirements for the Targeted EIDL Advances and their applicability to agriculture, we will follow up with an additional blog post on this information. We also expect to provide further information on the tax parameters, such as the ERC.
Sources include the final amended law text from Congress.gov, the section-by-section analysis from the House Committee on Budget, and the Congressional Budget Office's February 17 cost estimates.
Updated March 11 and 22.
