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Legislative update: What's in the second stimulus of 2020

Tomorrow will certainly be brighter, since the winter solstice has passed, and with it, the darkest day of the year. From here out, daylight hours will get progressively longer until the summer solstice on June 21.

In today’s email we summarize what was agreed to in the coronavirus relief bill, what’s going on with the stock market, some info about the new strain of coronavirus in the UK, and we end with a sweet treat for the eyes.

As we all look forward to the future sunny summer days outside, there is some brighter news today as well: As expected, and with strong bipartisan support, Congress agreed to a ‘Spending and Relief Bill’ to inject some help for families and small businesses until the economy can reopen further. The bill now awaits the President's signature. [Update: The President signed the bill on Monday, December 28.]

Client Corner: Due to the holiday schedule, this is our last email of the year, unless something big and unexpected happens before year-end.

AP Photo/Jose Luis Magana

What’s in the $900 billion relief package (taxfoundation.org, WSJ.com

Individual benefits: 

  • Direct payments of $600 to most Americans, plus $600 per child under 17. Applies to individuals who earned up to $75k and couples who made up to $150k in 2019, with a phase-out for higher-income individuals. 
  • Unemployment insurance supplement of $300 per week for 10 weeks through mid-March. 
  • Eviction moratorium expanded through January 31, plus a $25 billion rental assistance fund. 
  • Food assistance including $13 billion for food banks to help families, and a 15% increase to Supplemental Nutrition Assistance Program (SNAP) benefits.
  • Flexible Spending Account (FSA) balances can be carried over to the next calendar year, to help families avoid losing money set aside for childcare that wasn’t able to be spent in 2020. 

Small business benefits: 

  • Paycheck Protection Program (PPP) loans of $284 billion for small businesses. 
  • Grants of $20 billion for companies in low-income areas. 
  • Childcare centers receive$10 billion to help reopen safely. 

Education: 

  • Education funding of $82 billion to help public schools, private and parochial schools, and higher education programs to reopen safely. 
  • Reversal of the ban on Pell Grants for higher education for incarcerated inmates to improve reintegration into the community. 

Medical, Transportation, Clean Energy, and Cultural Venues: 

  • Covid-19 vaccine distribution funding of $8 billion, and testing and tracing aid of $20 billion to states. 
  • Transportation aid of $45 billion for airline payroll assistance, mass transit systems, and state highways. 
  • Clean energy funding for construction of new wind and solar power plants, and renewable energy tax credits. 
  • Cultural events aid of $15 million for live event venues, movie theaters and museums. 

Getty Images/ Tasos Katopodis

How to treat the relief check on your taxes: The stimulus checks are treated as fully refundable tax credits for 2020 under the Cares Act, which means they aren't included in gross income and thereby aren’t subject to taxes.

Eligibility for the checks is based on your 2018 or 2019 tax returns, just like in the spring. However, if your 2020 income puts you newly within the eligible range, you’ll likely qualify for a retroactive benefit. Read more about the second relief checks at WSJ.com.

Market Reactions:The market continues to do well despite job losses and small business struggles because economic indicators and the stock market evaluate different time frames: The stock market sees profits improving in a few months (future), while economic indicators are all looking backwards (past and present). 

The next two weeks will have very light trading due to the holidays, so headlines could drive stronger short-term reactions. While we are always watching, it is best to take it all with a grain of salt in these low volume weeks. 

New strain of Coronavirus in UK, but the vaccine should work: Multiple nations quickly moved to restrict all types of travel to or from the U.K. after government health officials identified a new strain of COVID-19 there. Fears of a vaccine-resistant version of the virus sparked significant declines in the stock market. An executive from BioNTech stated that their vaccine with Pfizer should work against the new strain of the coronavirus in the U.K., easing concerns linked to the outbreak.

On the lighter side...works of art for the holidays:

The Rhinehart sisters took first place at the 28th National Gingerbread House Competition in the Teen (13-17) category with “Peace, Joy, Love,” below. Take a break from the news to enjoy all the winning gingerbread houses at bakemag.com.