The 2020 stimulus bill, known as the CARES Act, was signed into law by President Trump on March 27, 2020 in order to combat the economic impact from the coronavirus pandemic which spread globally in early 2020. The $2 trillion bill is considered the largest economic aid package in US history.
The 2020 stimulus bill is a spending bill of over $2 trillion in spend mostly targeting the following:
- Small businesses: $375 billion
- Corporations: $500 billion
- Individuals: $600 billion
- State & local governments: $340 billion
- Public health/services: $180 billion
- Other
Payments for individuals ($600 billion / roughly 30% of the 2020 stimulus bill)
In order to protect individuals who are losing jobs and are negatively impacted by the economic shutdown of March 2020, the 2020 stimulus bill sent payments directly to a majority of Americans. For those earning up to $75,000, individuals received a payment of $1,200. The money phases out if you earn $99,000 or above. There are also additional payments of $500 per child in your home. You can use the stimulus calculator here to see how much you will earn.
There are also additional provisions that can affect individuals. For example, government student loans are suspended meaning no payments and interest are required until later in 2020. Borrowers of federally backed mortgages can get a pause on mortgage payments for six months. Lastly, unemployment benefits are expanded for those who lost jobs.
Corporate America ($500 billion / roughly 25% of the 2020 stimulus bill)
This part of the stimulus bill is aimed at shoring up large corporations in America that have been hit particularly hard by the coronavirus and the corresponding economic shutdown. Read more about the stock market crash here.
The airlines industry was hit quite hard by the shutdown, and approximately $60 billion of the amount is said to be earmarked for the airlines.
Generally, a portion of the funds will be used as loans and grants for large companies that maintain payrolls. This is the federal government’s attempt to mitigate excessive job loss in the country.
Small Business ($375 billion / roughly 20% of the 2020 stimulus bill)
To help small businesses that have been hit by the economic fallout of the coronavirus, the 2020 stimulus bill provides loans through the Small Business Administration (SBA). These small businesses that apply for the loans will have these loans forgiven (essentially turn into grants) if these companies use these funds to maintain payroll and pay things such as rent and utilities.
State and Local Governments ($340 billion / roughly 17% of the 2020 stimulus bill)
These funds are meant to backstop the budgets of state and local governments who are having to spend increasing amounts to both fight the coronavirus from a public health perspective and also provide a safety net to individuals getting hit by the economic ramifications of the situation.
Passage of the 2020 stimulus bill
As the coronavirus pandemic took hold in America, governments responded by requesting various parts of the economy to shutdown and much of corporate America put a halt to things like travel and in-person gatherings of large groups. There was an immediate economic hit to major industries such as airlines, travel and cruise lines, but the economic damage quickly spread to much of the economy especially places such as restaurants, movie theaters, malls and retail stores. As the economic carnage spread, lawmakers and President Trump began discussing the need for an immediate stimulus bill.
By and large, the 2020 stimulus bill was passed with broad bipartisan support. While there was some debate and angst over certain small allocations within the bill (like most legislation these days), the bills passed with broad support. Prior to passage in the House, Representative Thomas Massie of Kentucky demanded that members of the House return to Washington, D.C. to record an official, in-person vote. Members of both parties were furious with the demand. While the bill was able to be passed with a voice vote instead, a number of House members did in fact need to return to the Capitol in order to achieve a quorum and vote down Massie’s request. Because multiple members of the House had already tested positive for COVID-19, the goal was to pass the legislation without crowding into the chamber for a typical vote.
Common questions on the individual stimulus payments
Do you have to pay taxes on the stimulus checks being sent out?
No.
Do you have to apply to receive a payment?
No. If the IRS already has your direct deposit information from a 2018 or 2019 tax return, the IRS will calculate the amount based on the previous returns and send you the money electronically.
At what level do the payment phase out?
If you are married filing jointly, have no children, the maximum total income is $198,000. So if you make more than that, you won’t get any money. If you’re an individual, you can’t earn more than $99,000 to get the stimulus check (assuming no children). If you have children, depending on the number of kids you have, these ceiling numbers might be slightly higher.