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Will You Still Get a Third Stimulus Check Under the New Senate Plan?

Kiplinger logo Kiplinger 3/3/2021 Rocky Mengle
text © Provided by Kiplinger

Fewer Americans would get a third stimulus check under a new plan agreed to by President Biden and Senate Democrats. The new proposal is designed to pull together Democrats in the Senate, who were divided over the stimulus check phase-out rate, so that they can get 50 votes for the president's $1.9 trillion COVID-relief package.

Because the Senate is split – 50 Democrats and 50 Republicans – Senate Democrats can't afford to lose any votes in order to pass the president's stimulus package, since no Republicans are expected to vote for it. (In the case of a tie, Vice President Kamala Harris would cast the deciding vote.) However, led by Sen. Joe Manchin (D-W.Va.), a handful of Democrats in the Senate pushed for the stimulus check plan to be more "targeted" to people who need assistance the most. In other words, those Senators argued that people with higher incomes should not receive a stimulus check.

As a result, under the new Senate plan, the third stimulus check for people with an income above a certain amount will be reduced – potentially to zero – at a faster rate than previously thought. According to the Institute on Taxation and Economic Policy, that means approximately 17 million fewer Americans (adults and children) would benefit from a third stimulus check under the Senate plan than under the House-passed bill. Will you be one of them?

[Note: We've updated our Third Stimulus Check Calculator to account for the Senate's new phase-out rates. Check it out to see how much money you would get under the new plan.]

Stimulus Check Plan Passed by the House

On February 27, the House of Representative passed the budget reconciliation bill that is being used to usher the president's stimulus package through Congress. (Reconciliation is a Congressional procedure that allows passage of a bill in the Senate with a simple majority vote instead of the usual 60 votes needed to avoid a filibuster.) Provisions in that bill would authorize another round of $1,400 stimulus checks for each eligible person ($2,800 for couples), plus an additional $1,400 for each dependent. However, as with the first- and second-round payments, the proposed third-round stimulus checks would be reduced – or eliminated – for people with an income above a certain amount.

Under the House-passed bill, if you filed your most recent tax return as a single filer, your third stimulus check would start to be "phased-out" (i.e., reduced) if your adjusted gross income (AGI) is $75,000 or more. That threshold would jump to $112,500 for head-of-household filers, and to $150,000 for married couples filing a joint return. Your third stimulus check would be reduced by $56 for each $1,000 of AGI above the applicable threshold. So, under the House plan, third-round stimulus checks would be completely phased out for single filers with an AGI above $100,000, head-of-household filers with an AGI over $150,000, and joint filers with an AGI exceeding $200,000.

Senate's New Phase-Out Rate

Under the new plan being considered by the Senate, the stimulus check phase-out thresholds would not change. So, you would still get a full payment if you're AGI is below the applicable amount for your tax return filing status: $75,000 for single filers, $112,500 for head-of-household filers, and $150,000 for joint filers.

However, the phase-out rate under the Senate plan is supercharged. Instead of $56 for each $1,000 of AGI above the applicable threshold, stimulus checks under the Senate proposal will be reduced by $280 for each $1,000 of AGI above the threshold amount. That's five times the rate applied under the House bill.

As a result, single filers with an AGI above $80,000 will not get any third stimulus check money under the Senate version of the plan. Under the House plan, the phase-out for single filers wasn't complete until $100,000 of AGI. That means single people with an AGI between $80,000 and $100,000 are shut out under the Senate plan, but they would still get something under the House plan.

For head-of-household filers, the point at which a third stimulus check would be reduced to zero drops from $150,000 to $120,000. So, head-of-household filers with an AGI between those two amounts lose out under the Senate plan.

The cut-off point for married couples filing a joint return under the Senate plan is $160,000. It's $200,000 under the House bill. As a result, joint filers with an AGI between $160,000 and $200,000 would not get a stimulus check under the Senate proposal, but they would under the House version.

Again, you can use Kiplinger's Third Stimulus Check Calculator to see how much YOU would get under the new Senate proposal.

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