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The Senate Just Passed the American Rescue Plan—Here's How It Differs From the House Version

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Senate Democrats passed their version of the near-$1.9 trillion American Rescue Plan Act Saturday afternoon, but not before making some major changes from the version of the bill passed by the House of Representatives last week.

Some of the most notable changes between the two relief bills include dropping a provision to gradually increase the minimum wage to $15 per hour and reducing the number of people who will qualify for a $1,400 stimulus payment.

The value of federal enhanced unemployment insurance (UI) benefits were also changed to appease moderate Democratic Senator Joe Manchin of West Virginia, who threatened not to support the bill. Just as in the House, no Republican lawmakers voted in favor of the legislation, saying it was unnecessary.

"This isn't a pandemic rescue package," Senate Minority Leader Mitch McConnell, R-K.Y, said on Friday. "It's a parade of left-wing pet projects that they are ramming through during a pandemic."

The bill keeps many of the progressive provisions from the House's version, and added a provision to make student loan forgiveness passed between Dec 31, 2020 and Jan 1, 2026 tax-free.

"Covid has affected nearly every aspect of life," Senate Majority Leader Chuck Schumer, D-N.Y., said Saturday. "The American Rescue Plan will deliver more help to more people than anything the federal government's done in decades."

Here are some of the major changes between the House and Senate versions of the bill that may affect your pocketbook.

Minimum wage

As expected, the provision to gradually increase the minimum wage to $15 per hour was stripped from the Senate's bill after the parliamentarian, a nonpartisan official who decides which bills qualify to pass the upper chamber via reconciliation, determined last week that the provision did not meet the standards legislation must meet to pass with a simple majority.

It's not clear it would have been included anyway: Seven Democratic senators and Angus King, the independent from Maine who caucuses with the Democrats, voted against an amendment proposed by Vermont Sen. Bernie Sanders, also an independent, to increase the minimum wage.

Stimulus payments

The bill provides funding for a third economic impact payment, worth up to $1,400 per individual and dependent.

Individuals earning an adjusted gross income (AGI) up to $75,000 (and married couples earning up to $150,000) are eligible for the the full $1,400 each, plus $1,400 for each dependent. In the Senate version, the payments phase out much more quickly than in the House version: No individual with an AGI over $80,000 or couples earning over $160,000 will receive one. Heads of household earning up to $112,500 will receive the full amount, and it will phase out completely at $120,000 for those filers.

In the previous version of the bill, the payments phased out completely at $100,000 for individuals and $200,000 for couples. An estimated 12 million fewer adults will now qualify for a stimulus payment, compared to previous rounds.

Many Americans were upset by the move to lower the top income eligibility threshold, calling it a "slap in the face" to middle class Americans who were counting on the money and no longer qualify.

The payments are based on either 2019 or 2020 income, depending on when a taxpayer files their 2020 tax return.

Unlike previous stimulus payments, adult dependents, including college students, disabled adults and elderly Americans, may qualify for a $1,400 payment.

Student loans

The Senate's bill includes a provision to make any student loan forgiveness passed between Dec 31, 2020 and Jan 1, 2026 tax-free. Usually, forgiven debt is treated as taxable income.

The Senate's bill does not include student debt forgiveness directly, but it would make it easier for President Joe Biden to forgive $10,000 in student debt, as he has said he wants to, by executive action, if Congress does not do it.

Unemployment insurance

The Senate's bill will extend the federal jobless benefit supplement at $300 per week through Sept. 6, and make the first $10,200 in UI received in 2020 non-taxable for households with incomes under $150,000.

That differs from the House bill, which extended jobless programs through Aug. 29 and gave an extra $400 per week in benefits. It did not include the provision to make any of the benefits non-taxable.

The House will now have to sign off of the changes before the bill can be signed by the president.

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