Congressional Research Service R46279 (The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief for Individuals and Businesses)

Summary

A Congressional Research Service report, R46279, coordinated by Molly F. Sherlock, updated April 28, 2020, on tax relief for individuals and businesses in the Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), signed into law on March 27, 2020. It lists the act's tax provisions, including a one-time rebate to taxpayers, modified tax treatment of certain retirement fund withdrawals and charitable contributions, and a delay of employer payroll taxes and taxes paid by certain corporations, among others. Its other authors are Margot L. Crandall-Hollick, Grant A. Driessen, Jane G. Gravelle and Donald J. Marples.

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The Coronavirus Aid, Relief, and Economic
Security (CARES) Act—Tax Relief for
Individuals and Businesses

Molly F. Sherlock, Coordinator
Specialist in Public Finance

Margot L. Crandall-Hollick
Acting Section Research Manager

Grant A. Driessen
Analyst in Public Finance

Jane G. Gravelle
Senior Specialist in Economic Policy

Donald J. Marples
Specialist in Public Finance

Updated April 28, 2020

Congressional Research Service
7-....
www.crs.gov
R46279
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

ongress has considered a number of proposals that seek to mitigate the economic effects

C of the Coronavirus disease 2019, or COVID-19, pandemic. One such proposal, the
Coronavirus Aid, Relief, and Economic Security (CARES) Act (P.L. 116-136), was signed
into law on March 27, 2020.
Tax relief for individuals and businesses in the CARES Act includes
 a one-time rebate to taxpayers;
 modification of the tax treatment of certain retirement fund withdrawals and
charitable contributions;
 a delay of employer payroll taxes and taxes paid by certain corporations; and
 other changes to the tax treatment of business income and net operating losses.
The CARES Act is part of a series of legislative packages addressing the COVID-19 pandemic.
Two other bills preceded the CARES Act: the Coronavirus Preparedness and Response
Supplemental Appropriations Act, 2020 (P.L. 116-123) and the Families First Coronavirus
Response Act (P.L. 116-127). On April 23, 2020, Congress passed its fourth measure to respond
to the COVID-19 pandemic, the Paycheck Protection Program and Health Care Enhancement Act
(P.L. 116-139).
The first version of the CARES Act (S. 3548) was introduced in the Senate on March 19, 2020.
On March 22, 2020, an updated version of the CARES Act was circulated, as a proposed
amendment to H.R. 748. A cloture vote on a motion to proceed, which was designed to allow
consideration of the CARES Act, was rejected on March 22.1 On March 23, 2020, an alternative
to the CARES Act, the Take Responsibility for Workers and Families Act (H.R. 6379), was
introduced in the House.2 A third version of the CARES Act was released on March 25, 2020.3 On
March 25, the Senate voted 96-0 to pass H.R. 748, having previously amended it with the CARES
Act. The House passed this version of the CARES Act on March 27, 2020, and President Trump
signed the CARES Act into law.
This report briefly summarizes the major individual and business tax provisions of the CARES
Act, as enacted (Table 1). Links to CRS resources that offer additional information are provided.
The Joint Committee on Taxation (JCT) estimated that the individual and business tax provisions
in the CARES Act would reduce federal tax revenue by $543.4 billion over the 10-year FY2020
through FY2030 budget window (Table 2).4 The JCT also prepared a technical explanation of the
provisions.5

1 See https://www.senate.gov/legislative/LIS/roll_call_lists/roll_call_vote_cfm.cfm?congress=116&session=2&vote=

00078.
2 For more information on the tax provisions in this proposal, see CRS Report R46283, The Take Responsibility for

Workers and Families Act: Division T—Revenue Provisions, coordinated by Molly F. Sherlock.
3 See https://www.appropriations.senate.gov/news/senate-passes-critical-bipartisan-legislation-to-address-national-

coronavirus-crisis.
4 Joint Committee on Taxation, “Estimated Revenue Effects of the Revenue Provisions Contained in an Amendment in

the Nature of a Substitute to H.R. 748, the ‘Coronavirus Aid, Relief, and Economic Security (‘CARES’) Act,’ as
Passed by the Senate on March 25, 2020, and Scheduled for Consideration by the House of Representatives on March
27, 2020,” JCX-11R-20, April 23, 2020, at https://www.jct.gov/publications.html?func=startdown&id=5255.
5 Joint Committee on Taxation, “Description Of The Tax Provisions Of P.L. 116-136, The Coronavirus Aid, Relief,

And Economic Security ("CARES”) Act,” JCX-12R-20, April 23, 2020, at https://www.jct.gov/publications.html?
func=startdown&id=5256.

Congressional Research Service 1
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

The report also summarizes tax provisions in earlier versions of the CARES Act—the first
version of the CARES Act (S. 3548) (Table A-1) as well as the version released March 22, 2020
(Table A-2).6

Table 1. Individual and Business Tax Provisions in the CARES Act (P.L. 116-136)
Provision Description CRS Resources

Title II, Subtitle B—Rebates and Other Individual Provisions
2020 recovery rebates Allows a credit against 2020 income taxes, but For more, see
for individuals advanced, generally based on information from  CRS Insight IN11282, COVID-19
2019 income tax returns. and Direct Payments to Individuals:
Credit equals $1,200 ($2,400 for married joint Summary of the 2020 Recovery
filers). Rebates/Economic Impact
Taxpayers eligible for the credit can also receive Payments in the CARES Act (P.L.
$500 for each child eligible for the child tax 116-136), by Margot L.
credit. Crandall-Hollick.
The total credit phases out at a rate of 5% of  CRS Insight IN11270, COVID-19
adjusted gross income (AGI) above $75,000 and Direct Payments to Individuals:
($112,500 for head of household filers, Estimated Impact of Recovery
$150,000 for married joint returns). Rebates in H.R. 748 on Family
Incomes, by Conor F. Boyle and
Generally, all individuals must have Social
Jameson A. Carter.
Security numbers. (Among members of the
Armed Forces, only one spouse must have an  CRS Insight IN11290, COVID-19
SSN.) and Direct Payments to Individuals:
Receiving a recovery rebate in 2020 does not Economic Impact Payments for
affect a taxpayer’s 2020 income tax liability or Social Security and Supplemental
tax refund. Security Income Beneficiaries, by
Paul S. Davies and William R.
Taxpayers must have filed a 2019 return (or Morton.
filed a 2018 return if they did not file a 2019
return) in order to get a rebate in 2020. For  CRS Insight IN11247, COVID-19
Social Security and Railroad Retirement and Direct Payments to Individuals:
recipients, if neither a 2019 nor a 2018 income Considerations on Using Advanced
tax return were filed, the law allows the IRS to Refundable Credits as Economic
use information from their 2019 Social Security Stimulus, by Margot L. Crandall-
or Railroad Retirement Benefit Statement (SSA- Hollick.
1099 or RRB-1099, respectively) to advance the  CRS Insight IN11256, COVID-19
payment automatically. Otherwise, the rebate and Direct Payments to Individuals:
can be claimed on a 2020 income tax return. Historical Precedents, by Gene
Falk.
 CRS Legal Sidebar LSB10442,
Recovery Rebates and
Unemployment Compensation
under the CARES Act: Immigration-
Related Eligibility Criteria, by Ben
Harrington.
 CRS Insight IN11234, Tax Cuts
as Fiscal Stimulus: Comparing a

6 Other tax-related provisions included in other divisions of the CARES Act, and not discussed in this report, include

changes that would temporarily suspend excise taxes related to aviation; provide a temporary tax exemption for certain
telehealth services; temporarily include certain over-the-counter medical costs as qualified medical expenses for tax
purposes; extend the sequestration on direct spending by one year, to 2030; and temporarily provide advance refunding
of payroll tax credits for sick leave and paid family leave. For more on the sick and family leave payroll tax credits, see
CRS Insight IN11243, Tax Credit for Paid Sick and Family Leave in the Families First Coronavirus Response Act
(H.R. 6201) (Updated), by Molly F. Sherlock.

Congressional Research Service 2
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
Payroll Tax Cut to a One-Time Tax
Rebate, by Molly F. Sherlock and
Donald J. Marples.
 CRS Report RS21126, Tax Cuts
and Economic Stimulus: How
Effective Are the Alternatives?, by
Jane G. Gravelle.
Special rules for use of For retirement plan distributions, the provision For more, see
retirement funds provides an exception to the 10% early  CRS In Focus IF11472,
withdrawal penalty for distributions up to Withdrawals and Loans from
$100,000 for coronavirus-affected individuals. Retirement Accounts for COVID-19
Income from such distributions can be Expenses, by John J. Topoleski
recognized over three years, and taxpayers can and Elizabeth A. Myers.
recontribute funds to an eligible retirement plan
in the first year or within three years without  CRS In Focus IF11482,
regard to the year’s contribution cap. For Retirement and Pension Provisions
coronavirus-affected individuals, loan limits from in the Coronavirus Aid, Relief, and
retirement plans are increased from $50,000 to Economic Security Act (CARES
$100,000 and the repayment deadline is delayed Act), by John J. Topoleski and
for loans that are due in 2020. Elizabeth A. Myers.
 CRS Report R45864, Tax Policy
and Disaster Recovery, by Molly F.
Sherlock and Jennifer Teefy.
 CRS In Focus IF11447, COVID-
19: Social Insurance and Other
Income-Support Options for Those
Unable to Work, coordinated by
Laura Haltzel.
Temporary waiver of In general, required minimum distribution For background on required
required minimum (RMD) rules required that taxpayers of a certain minimum distributions, see
distribution rules for age withdraw minimum amounts annually. RMD  CRS Insight IN11272, Required
certain retirement rules typically apply to taxpayers after reaching Minimum Distributions from
plans and accounts age 72 (70½ before 2020). This provision Retirement Accounts Under the
waives minimum distribution requirements for Economic Stimulus Proposals
2020. Related to the Coronavirus
(COVID-19), by Jane G. Gravelle.
 CRS Insight IN11349, The
CARES Act and Required Minimum
Distributions (RMDs): Options for
Certain Individuals, by Elizabeth
A. Myers.
 CRS In Focus IF11482,
Retirement and Pension Provisions
in the Coronavirus Aid, Relief, and
Economic Security Act (CARES
Act), by John J. Topoleski and
Elizabeth A. Myers.
Allowance of partial An above-the-line deduction for cash For more on the tax treatment of
above-the-line contributions of up to $300 is available for charitable contributions, see
deduction for taxpayers not itemizing deductions in 2020.  CRS Report R45922, Tax Issues
charitable Relating to Charitable
contributions Contributions and Organizations,
by Jane G. Gravelle, Donald J.
Marples, and Molly F. Sherlock.

Congressional Research Service 3
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
 CRS In Focus IF11022, The
Charitable Deduction for
Individuals, by Margot L.
Crandall-Hollick and Molly F.
Sherlock.
Modification of Income limits apply to both individual and For more on disaster-related
limitations on charitable contribution deductions. This changes in charitable giving limits, see
charitable provision suspends the 50% of AGI limit  CRS Report R45864, Tax Policy
contributions during (temporarily 60% for cash contributions through and Disaster Recovery, by Molly F.
2020 2025) on cash contributions for individuals for Sherlock and Jennifer Teefy.
2020. The corporate deduction limit is
increased from 10% of taxable income to 25%
for cash contributions. The limit on the For more on the tax treatment of
deduction of food inventory is increased from charitable contributions, see
15% to 25%. The increased limits do not apply  CRS Report R45922, Tax Issues
to contributions to private foundations and Relating to Charitable
donor-advised funds. Contributions and Organizations,
by Jane G. Gravelle, Donald J.
Marples, and Molly F. Sherlock.
 CRS In Focus IF11022, The
Charitable Deduction for
Individuals, by Margot L.
Crandall-Hollick and Molly F.
Sherlock.

Congressional Research Service 4
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources

Exclusion for certain Temporarily expands the definition of For background on the tax treatment
employer payments of employer-sponsored educational assistance to of employer-sponsored educational
student loans include qualified student loan payments made to assistance, see
employees in 2020. Generally, employers can  CRS Report R41967, Higher
provide their employees with up to $5,250 per Education Tax Benefits: Brief
employee per year in educational assistance— Overview and Budgetary Effects,
generally for tuition, fees, and related supplies— by Margot L. Crandall-Hollick.
that is excluded from wages (and hence not
subject to income or payroll taxes). Under this
provision, qualified student loan payments are
subject to the overall cap of $5,250 per
employee per year.
Payments made by the employer can go to the
employee directly or to the lender. Payments
can cover both the principal and interest of the
qualified student loan. Qualified student loans
are those eligible for the student loan interest
deduction (IRC Section 221(d)(1)) that are
incurred by the employer for the employee’s
education. This provision applies to any student
loan payment made by an employer on an
employee’s behalf after the date of enactment
and before January 1, 2021.
Title II, Subtitle C—Business Provisions
Employee retention Creates a refundable payroll tax credit For more, see
credit for employers computed as 50% of wages paid by eligible  CRS Insight IN11299, COVID-19:
subject to closure due employers. Up to $10,000 in qualified wages can The Employee Retention Tax
to COVID-19 be taken into account per employee in Credit, by Molly F. Sherlock.
determining the credit amount. Health plan
expenses can be treated as wages when  CRS Insight IN11324, CARES Act
computing the credit. Assistance for Employers and
Employees—The Paycheck
Eligible employers are those who (1) were Protection Program, Employee
required to fully or partially suspend operations Retention Tax Credit, and
due to a COVID-19-related order (includes Unemployment Insurance Benefits:
nonprofit employers); or (2) have gross receipts Overview (Part 1), coordinated by
50% less than gross receipts in the same quarter Molly F. Sherlock.
in the prior calendar year.
 CRS Insight IN11329, CARES Act
Qualified wages depend on the number of
Assistance for Employers and
employees the employer had during 2019. If the
Employees—The Paycheck
employer had more than 100 full-time
Protection Program, Employee
employees, qualifying wages are wages paid
Retention Tax Credit, and
when employee services are not provided (with
Unemployment Insurance Benefits:
qualifying wages limited to the amount the
Assessment of Alternatives (Part
employee would have been paid for working an
2), coordinated by Molly F.
equivalent duration during the 30 days
Sherlock.
preceding the nonservice period). If the
employer had 100 or fewer full-time employees,
all employee wages paid by eligible employers
are credit-eligible.
This credit does not apply to government
employers. The Social Security trust funds are
not affected.
Delay of payment of Employers and self-employed individuals can For more, see
employer payroll defer, or postpone, the employer share of the  CRS Insight IN11260, COVID-19
taxes Social Security payroll tax through the end of Economic Stimulus: Business
2020. Deferred tax liability can be paid in two

Congressional Research Service 5
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
installments: one due by December 31, 2021, Payroll Tax Cuts, by Molly F.
and the second by December 31, 2022. The Sherlock and Donald J. Marples.
Social Security trust funds are not affected.
Modifications for net The provision allows carrybacks for up to five For more, see
operating losses years for net operating losses (NOLs) recorded  CRS Insight IN11296, Tax
in tax years 2018, 2019, and 2020. NOL Treatment of Net Operating
carryback capabilities were repealed by the Losses (NOLs) in the Coronavirus
2017 tax revision (P.L. 115-97), and were Aid, Relief, and Economic Security
previously allowed for up to two years. This (CARES) Act, by Jane G. Gravelle.
provision also temporarily lifts the income
limitation applicable to the corporate income  CRS Insight IN11240, COVID-19:
tax treatment of NOLs under current law. Potential Role of Net Operating
Loss (NOL) Carrybacks in
Addressing the Economic Effects,
by Mark P. Keightley.
 CRS Insight IN11314, Interaction
of International Tax Provisions with
Business Provisions in the CARES
Act, by Jane G. Gravelle.
Modification of This provision suspends the limit on deductions For more, see
limitation on losses for excess business losses for 2018-2020. An  CRS Insight IN11296, Tax
for taxpayers other excess business loss is the amount that a Treatment of Net Operating
than corporations taxpayer’s aggregate deductions attributable to Losses (NOLs) in the Coronavirus
trades and businesses exceeds the sum of (1) Aid, Relief, and Economic Security
aggregate gross income or gain attributable to (CARES) Act, by Jane G. Gravelle.
such activities; and (2) $250,000 ($500,000 if
married filing jointly), adjusted for inflation. For  CRS Insight IN11240, COVID-19:
partnerships and S corporations, this provision Potential Role of Net Operating
is applied at the partner or shareholder level. Loss (NOL) Carrybacks in
This provision expires after 2025. Addressing the Economic Effects,
by Mark P. Keightley.
Modification of credit The corporate alternative minimum tax (AMT) For more on the corporate AMT
for prior year was repealed by the 2017 tax revision (P.L. 115- before its repeal, see
minimum tax liability 97). Corporations having AMT credits (for prior  CRS In Focus IF10705, Tax
of corporations year AMT payments) were allowed to claim the Reform: The Alternative Minimum
credits against regular tax liability for tax years Tax, by Donald J. Marples.
through 2021. This provision makes these
credits refundable in tax years 2018 and 2019.
Modification of The 2017 tax revision (P.L. 115-97) reduced the For more, see
limitation on business limit on the deduction for net interest from 50%  CRS Insight IN11287, Limits on
interest to 30% of adjusted taxable income (income Business Interest Deductions
before taxes, interest deductions, and Under the Coronavirus Aid, Relief,
depreciation, amortization or depletion and Economic Security (CARES)
deductions). P.L. 115-97 also eliminated the rule Act, by Jane G. Gravelle.
that restricted net interest deduction limits to
firms with a debt-to-equity ratio above 1.5.  CRS Report R45186, Issues in
These revisions were adopted, in part, to International Corporate Taxation:
reduce profit-shifting by multinational The 2017 Revision (P.L. 115-97),
corporations (by borrowing in the United by Jane G. Gravelle and Donald
States). This provision increases the limit to 50% J. Marples.
for 2019 and 2020.  CRS Insight IN11314, Interaction
of International Tax Provisions with
Business Provisions in the CARES
Act, by Jane G. Gravelle.
Technical The 2017 tax revision (P.L. 115-97) increased For more, see
amendments regarding the period for deducting the cost of qualified

Congressional Research Service 6
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
qualified improvement improvement property (leasehold, restaurant,  CRS In Focus IF11187, Qualified
property and retail property improvements) from 15 Improvement Property and the
years to 39 years. This change was apparently a 2017 Tax Revision (P.L. 115-97),
technical error that also prevented these by Gary Guenther.
investments from being expensed immediately
(sometimes referred to as bonus depreciation).
This provision allows these investments to be
expensed.
Temporary exception Undenatured ethanol is subject to the excise tax For background on alcohol excise
from excise tax for on distilled spirits that normally applies to taxes, see
alcohol used to alcoholic products for consumption. The  CRS Report R43350, Alcohol
produce hand current tax rate on distilled spirits is $13.50 per Excise Taxes: Current Law and
sanitizer proof gallon. A proof gallon is 50% alcohol. The Economic Analysis, by Sean
change exempts distilled spirits used to make Lowry.
hand sanitizer for 2020.

Source: CRS analysis of the CARES Act (P.L. 116-136).

The Joint Committee on Taxation (JCT) estimated that the lost revenue from Subtitles B and C of
Title II of the Coronavirus Aid, Relief, and Economic Security (CARES) Act will be $543.4
billion for FY2020 through FY2030 (see Table 2). The largest provision, in terms of federal
revenue loss, is the individual 2020 recovery rebates. It is estimated that this provision will
reduce federal revenue by $292.4 billion, with most of the revenue loss occurring in FY2020. For
businesses, the largest provision in FY2020 and FY2021 is the one that allows employers to delay
payroll tax payments. This will reduce federal revenues by $211.1 billion and $140.7 billion in
FY2020 and FY2021, respectively. However, since this is a delay in payment, much of this lost
revenue is recovered when delayed tax payments are made in FY2022 and FY2023. For
businesses, the largest provision in terms of revenue loss over the FY2020 through FY2030
budget window, at $135.0 billion, is that which eliminates the dollar limits on loss offsets against
ordinary income for noncorporate taxpayers.

Congressional Research Service 7
Table 2. Revenue Losses from the CARES Act Individual and Business Tax Provisions, FY2020-FY2030
(in millions of dollars)
Provision 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2020-2030

Rebates and Other Individual Provisions
2020 recovery rebates 268,984 23,390 — — — — — — — — — 292,374
for individuals
Special rules for use of -144 2,096 333 27 17 21 30 36 42 48 54 2,560
retirement funds
Temporary waiver of 10,620 1,104 -923 -999 -852 -774 -824 -795 -731 -670 -619 4,538
required minimum
distribution rules for
certain retirement plans
and accounts
Allowance of partial 310 1,241 — — — — — — — — — 1,551
above-the-line deduction
for charitable
contributions
Modification of limitations 1,080 3,748 -2,403 -741 -367 -45 -179 — — — — 1,093
on charitable
contributions during 2020
Exclusion for certain 215 245 — — — — — — — — — 460
employer payments of
student loans
Business Provisions
Employee retention 49,115 5,457 — — — — — — — — — 54,572
credit for employers
subject to closure due to
COVID-19
Delay of payment of 211,071 140,714 -170,967 -168,505 — — — — — — — 12,312
employer payroll taxes
Modifications for net 80,032 8,671 -3,133 -4,053 -9,009 -12,990 -12,673 -8,701 -6,214 -2,945 -3,477 25,509
operating losses

CRS-8
Provision 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2020-2030

Modification of limitation 74,339 64,046 1,773 793 394 202 104 48 25 13 7 135,028
on losses for taxpayers
other than corporations
Modification of credit for 3,201 -3,201 — — — — — — — — — —
prior year minimum tax
liability of corporations
Modification of limitation 7,173 4,915 461 444 298 74 19 5 1 -i- -i- 13,390
on business interest
Technical amendments — — — — — — — — — — — —
regarding qualified
improvement property
Temporary exception -i- -i- — — — — — — — — — -i-
from excise tax for
alcohol used to produce
hand sanitizer
Total 705,996 252,426 -178,405 -174,620 -10,307 -13,916 -13,731 -9,503 -6,927 -3.580 -4,049 543,387

Source: Joint Committee on Taxation, JCX-11R-20, April 23, 2020, at https://www.jct.gov/publications.html?func=startdown&id=5255.
Notes: -i- represents loss of less than $500,000. A positive value indicates a revenue loss, or decrease in federal revenue. A negative value indicates an increase in federal
revenue.

CRS-9
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Appendix. Earlier Versions of the CARES Act
This Appendix contains information on the earlier versions of the CARES Act, the versions that
preceded what became law. The first version of the CARES Act (S. 3548) was introduced in the
Senate on March 19, 2020 (Table A-1.) On March 22, 2020, an updated version of the CARES
Act was circulated, as a proposed amendment to H.R. 748 (Table A-2).

Table A-1. Provisions in Division B of the CARES Act (S. 3548),
as Introduced on March 19, 2020
Provision Description CRS Resources

Title I—Rebates and Other Individual Provisions
2020 recovery Credit against 2020 income taxes, but For more, see
rebates for individuals advanced, generally based on 2018 income tax  CRS Insight IN11255, COVID-19
returns. and Direct Payments to Individuals:
Credit equals the greater of How Did the 2008 Recovery
(1) taxpayer’s net income tax liability up to Rebates Work?, by Margot L.
$1,200 ($2,400 for married joint filers). Net Crandall-Hollick.
income tax liability is income tax liability before  CRS Insight IN11247, COVID-19
the child tax credit and refundable tax credits and Direct Payments to Individuals:
(like the EITC); or Considerations on Using Advanced
(2) $600 ($1,200 for married joint filers) if the Refundable Credits as Economic
taxpayer has qualifying income. To have Stimulus, by Margot L. Crandall-
qualifying income, taxpayer must have either Hollick.
(a) at least $2,500 in total of earned income,  CRS Insight IN11256, COVID-19
Social Security income, or veterans’ benefits, and Direct Payments to Individuals:
or (b) gross income above the taxpayer’s Historical Precedents, by Gene Falk.
standard deduction and $1 of net income tax
 CRS Legal Sidebar LSB10442,
liability.
Recovery Rebates and
Taxpayers eligible for the credit can also Unemployment Compensation under
receive $500 for each child eligible for the the CARES Act: Immigration-Related
child credit. Eligibility Criteria, by Ben
The total credit phases out at a rate of 5% of Harrington.
adjusted gross income (AGI) above $75,000  CRS Insight IN11234, Tax Cuts as
($150,000 for married joint returns). Fiscal Stimulus: Comparing a Payroll
All individuals must have Social Security Tax Cut to a One-Time Tax Rebate,
numbers. by Molly F. Sherlock and Donald J.
Taxpayers must have filed a 2018 return (or Marples.
file a 2019 return if they did not file a 2018  CRS Report RS21126, Tax Cuts
return) in order to get a rebate in 2020. and Economic Stimulus: How
Otherwise, it can be claimed on a 2020 Effective Are the Alternatives?, by
income tax return. Jane G. Gravelle.
Delay of certain Tax filing deadline extended from April 15, For more on IRS administrative relief
deadlines 2020, to July 15, 2020, to align with the for tax filing deadlines following
extended payment deadline. Allows individuals disasters, see
required to make estimated tax payments to  CRS Report R45864, Tax Policy
postpone such payments until October 15, and Disaster Recovery, by Molly F.
2020. Sherlock and Jennifer Teefy.
Special rules for use For retirement plan distributions, the For more on disaster-related special
of retirement funds provision would provide an exception to the retirement fund access, see
10% early withdrawal penalty for distributions  CRS In Focus IF11472,
up to $100,000 for coronavirus-affected Withdrawals and Loans from
individuals. Income from such distributions Retirement Accounts for COVID-19
would be recognized over three years, and

Congressional Research Service 10
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
taxpayers can recontribute funds to an eligible Expenses, by John J. Topoleski and
retirement plan in the first year or within Elizabeth A. Myers.
three years without regard to the year’s  CRS Report R45864, Tax Policy
contribution cap. For coronavirus-affected and Disaster Recovery, by Molly F.
individuals, loan limits from retirement plans Sherlock and Jennifer Teefy.
would be increased from $50,000 to $100,000
and the repayment deadline is delayed for  CRS In Focus IF11447, COVID-19:
loans that are due in 2020. Social Insurance and Other Income-
Support Options for Those Unable to
Work, coordinated by Laura
Haltzel.
Allowance of partial An above-the-line deduction for cash For more on the tax treatment of
above-the-line contributions of up to $300 would be made charitable contributions, see
deduction for available for taxpayers not itemizing  CRS Report R45922, Tax Issues
charitable deductions. Relating to Charitable Contributions
contributions and Organizations, by Jane G.
Gravelle, Donald J. Marples, and
Molly F. Sherlock.
 CRS In Focus IF11022, The
Charitable Deduction for Individuals,
by Margot L. Crandall-Hollick and
Molly F. Sherlock.
Modification of Income limits apply to both individual and For more on disaster-related changes
limitations on charitable contribution deductions. This in charitable giving limits, see
charitable provision would suspend the 50% of AGI limit  CRS Report R45864, Tax Policy
contributions during (temporarily 60% for cash contributions and Disaster Recovery, by Molly F.
2020 through 2025) on cash contributions for Sherlock and Jennifer Teefy.
individuals for 2020. The corporate deduction
limit would be increased from 10% of taxable
income to 25% for cash contributions. The For more on the tax treatment of
limit on the deduction of food inventory charitable contributions, see
would be increased from 15% to 25%. The  CRS Report R45922, Tax Issues
increased limits do not apply to contributions Relating to Charitable Contributions
to private foundations and donor-advised and Organizations, by Jane G.
funds. Gravelle, Donald J. Marples, and
Molly F. Sherlock.
 CRS In Focus IF11022, The
Charitable Deduction for Individuals,
by Margot L. Crandall-Hollick and
Molly F. Sherlock.
Title II—Business Provisions
Delay of estimated Corporations would be allowed to postpone
tax payments for estimated tax payments to October 15, 2020.
corporations
Delay of payment of Employers and self-employed individuals would For more, see
employer payroll be able to defer, or postpone, the employer  CRS Insight IN11260, COVID-19
taxes share of the Social Security payroll tax through Economic Stimulus: Business Payroll
the end of 2020. Deferred tax liability would Tax Cuts, by Molly F. Sherlock and
be paid in two installments: one due by Donald J. Marples.
December 31, 2021, and the second by
December 31, 2022. The Social Security trust
funds would not be affected.
Modifications for net The provision would allow carrybacks for up For more, see
operating losses to five years for net operating losses (NOLs)

Congressional Research Service 11
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
recorded in tax years 2018, 2019, and 2020.  CRS Insight IN11296, Tax
NOL carryback capabilities were repealed by Treatment of Net Operating Losses
the 2017 tax revision (P.L. 115-97), and were (NOLs) in the Coronavirus Aid,
previously allowed for up to two years. This Relief, and Economic Security
provision would also temporarily lift the (CARES) Act, by Jane G. Gravelle.
income limitation applicable to the corporate  CRS Insight IN11240, COVID-19:
income tax treatment of NOLs under current Potential Role of Net Operating Loss
law. (NOL) Carrybacks in Addressing the
Economic Effects, by Mark P.
Keightley.
 CRS Insight IN11314, Interaction
of International Tax Provisions with
Business Provisions in the CARES Act,
by Jane G. Gravelle
Modification of This provision suspends the limit on For more, see
limitation on losses deductions for excess business losses for  CRS Insight IN11296, Tax
for taxpayers other 2018-2020. An excess business loss is the Treatment of Net Operating Losses
than corporations amount that a taxpayer’s aggregate deductions (NOLs) in the Coronavirus Aid,
attributable to trades and businesses exceeds Relief, and Economic Security
the sum of (1) aggregate gross income or gain (CARES) Act, by Jane G. Gravelle.
attributable to such activities; and (2)
$250,000 ($500,000 if married filing jointly),  CRS Insight IN11240, COVID-19:
adjusted for inflation. For partnerships and S Potential Role of Net Operating Loss
corporations, this provision is applied at the (NOL) Carrybacks in Addressing the
partner or shareholder level. This provision Economic Effects, by Mark P.
expires after 2025. Keightley.

Modification of credit The corporate alternative minimum tax (AMT) For more on the corporate AMT
for prior year was repealed by the 2017 tax revision (P.L. before its repeal, see
minimum tax liability 115-97). Corporations having AMT credits  CRS In Focus IF10705, Tax
of corporations (for prior year AMT payments) were allowed Reform: The Alternative Minimum
to claim the credits against regular tax liability Tax, by Donald J. Marples.
for tax years through 2021. This provision
makes these credits refundable.
Modification of The 2017 tax revision (P.L. 115-97) reduced For more, see
limitation on business the limit on the deduction for net interest  CRS Insight IN11287, Limits on
interest from 50% to 30% of adjusted taxable income Business Interest Deductions Under
(income before taxes, interest deductions, and the Coronavirus Aid, Relief, and
depreciation, amortization or depletion Economic Security (CARES) Act, by
deductions). P.L. 115-97 also eliminated the Jane G. Gravelle.
rule that restricted net interest deduction
limits to firms with a debt-to-equity ratio  CRS Report R45186, Issues in
above 1.5. These revisions were adopted, in International Corporate Taxation:
part, to reduce profit-shifting by multinational The 2017 Revision (P.L. 115-97), by
corporations (by borrowing in the United Jane G. Gravelle and Donald J.
States). This provision would increase the limit Marples.
to 50% for 2019 and 2020.  CRS Insight IN11314, Interaction
of International Tax Provisions with
Business Provisions in the CARES Act,
by Jane G. Gravelle
Technical The 2017 tax revision (P.L. 115-97) increased For more, see
amendments the period for deducting the cost of qualified  CRS In Focus IF11187, Qualified
regarding qualified improvement property (leasehold, restaurant, Improvement Property and the 2017
improvement and retail property improvements) from 15 Tax Revision (P.L. 115-97), by Gary
property years to 39 years. This change was apparently Guenther.
a technical error that also prevented these
investments from being expensed immediately

Congressional Research Service 12
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
(sometimes referred to as bonus depreciation).
This provision would allow these investments
to be expensed.
Installments not to As part of the transition to a new international For more, see
prevent credit or tax regime under the 2017 tax revision (P.L.  CRS Report R45186, Issues in
refund of 115-97), firms were required to pay taxes on International Corporate Taxation:
overpayments or their prior untaxed foreign earnings (the The 2017 Revision (P.L. 115-97), by
increase estimated repatriation tax). Firms could elect to pay Jane G. Gravelle and Donald J.
taxes these taxes in eight annual installments. Due Marples.
to what was apparently a technical error, firms
that overpaid their regular taxes in 2017 could
not receive a refund if they owed taxes on
repatriations. This provision allows firms to
receive refunds for 2017.
Restoration of The 2017 tax revision (P.L. 115-97) treats For more, see
limitation on stock owned by a foreign person as  CRS Report R45186, Issues in
downward attribution attributable to a U.S. entity owned by the International Corporate Taxation:
of stock ownership in foreign person (“downward attribution”). As a The 2017 Revision (P.L. 115-97), by
applying constructive result, stock owned by a foreign person may Jane G. Gravelle and Donald J.
ownership rules generally be attributed to (1) a U.S. Marples.
corporation, 10% of the value of the stock of
which is owned, directly or indirectly, by the
foreign person; (2) a U.S. partnership in which
the foreign person is a partner; and (3) certain
U.S. trusts if the foreign person is a beneficiary
or, in certain circumstances, a grantor or a
substantial owner. Downward attribution rules
can result in additional tax to the U.S. entity
under rules taxing certain income of
controlled foreign corporations. This provision
limits the application of the downward
application rules to a U.S. corporation owning,
directly or indirectly, 50% of the value of
stock.

Source: CRS analysis of the CARES Act (S. 3548, as Introduced).
a. In guidance released on March 18, 2020, the U.S. Department of the Treasury announced that the tax
payment deadline had been extended from April 15, 2020, to July 15, 2020. This guidance did not extend
the April 15, 2020, filing deadline. See U.S. Department of the Treasury, “Treasury and IRS Issue Guidance
on Deferring Tax Payments Due to COVID-19 Outbreak,” press release, March 18, 2020, at
https://home.treasury.gov/news/press-releases/sm948. Subsequently, Treasury announced via tweet that the
tax filing deadline would also be moved to July 15, 2020.

Table A-2. Individual and Business Tax Provisions in the CARES Act, March 22, 2020,
Version
Provision Description CRS Resources

Title II, Subtitle B—Rebates and Other Individual Provisions
2020 recovery rebates Would allow a credit against 2020 income For more, see
for individuals taxes, but advanced, generally based on  CRS Insight IN11282, COVID-19
information from 2019 income tax returns. and Direct Payments to Individuals:
Credit would equal $1,200 ($2,400 for Summary of the 2020 Recovery
married joint filers). Rebates/Economic Impact
Payments in the CARES Act (P.L.

Congressional Research Service 13
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
Taxpayers eligible for the credit could also 116-136), by Margot L. Crandall-
receive $500 for each child eligible for the Hollick.
child tax credit.  CRS Insight IN11270, COVID-19
The total credit to phase out at a rate of 5% and Direct Payments to Individuals:
of adjusted gross income (AGI) above $75,000 Estimated Impact of Recovery
($112,500 for head of household filers, Rebates in H.R. 748 on Family
$150,000 for married joint returns). Incomes, by Conor F. Boyle and
Generally, all individuals must have Social Jameson A. Carter.
Security numbers. (Among members of the  CRS Insight IN11290, COVID-19
Armed Forces, only one spouse must have an and Direct Payments to Individuals:
SSN.) Economic Impact Payments for
Taxpayers must have filed a 2019 return (or Social Security and Supplemental
filed a 2018 return if they did not file a 2019 Security Income Beneficiaries, by
return) in order to get a rebate in 2020. For Paul S. Davies and William R.
Social Security and Railroad Retirement Morton.
recipients, if neither a 2019 nor a 2018  CRS Insight IN11247, COVID-19
income tax return were filed, the law allows and Direct Payments to Individuals:
the IRS to use information from their 2019 Considerations on Using Advanced
Social Security or Railroad Retirement Benefit Refundable Credits as Economic
Statement (SSA-1099 or RRB-1099, Stimulus, by Margot L. Crandall-
respectively). Otherwise, the rebate could be Hollick.
claimed on a 2020 income tax return.
 CRS Insight IN11256, COVID-19
and Direct Payments to Individuals:
Historical Precedents, by Gene
Falk.
 CRS Legal Sidebar LSB10442,
Recovery Rebates and
Unemployment Compensation
under the CARES Act: Immigration-
Related Eligibility Criteria, by Ben
Harrington.
 CRS Insight IN11234, Tax Cuts as
Fiscal Stimulus: Comparing a Payroll
Tax Cut to a One-Time Tax Rebate,
by Molly F. Sherlock and Donald
J. Marples.
 CRS Report RS21126, Tax Cuts
and Economic Stimulus: How
Effective Are the Alternatives?, by
Jane G. Gravelle.
Special rules for use of For retirement plan distributions, the For more, see
retirement funds provision would provide an exception to the  CRS In Focus IF11472,
10% early withdrawal penalty for distributions Withdrawals and Loans from
up to $100,000 for coronavirus-affected Retirement Accounts for COVID-19
individuals. Income from such distributions Expenses, by John J. Topoleski
would be recognized over three years, and and Elizabeth A. Myers.
taxpayers can recontribute funds to an eligible
retirement plan in the first year or within  CRS In Focus IF11482, Retirement
three years without regard to the year’s and Pension Provisions in the
contribution cap. For coronavirus-affected Coronavirus Aid, Relief, and
individuals, loan limits from retirement plans Economic Security Act (CARES Act),
would be increased from $50,000 to $100,000 by John J. Topoleski and
and the repayment deadline is delayed for Elizabeth A. Myers.
loans that are due in 2020.

Congressional Research Service 14
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
 CRS Report R45864, Tax Policy
and Disaster Recovery, by Molly F.
Sherlock and Jennifer Teefy.
 CRS In Focus IF11447, COVID-19:
Social Insurance and Other Income-
Support Options for Those Unable
to Work, coordinated by Laura
Haltzel.
Temporary waiver of In general, required minimum distribution For background on required minimum
required minimum (RMD) rules require that taxpayers of a distributions, see
distribution rules for certain age withdraw minimum amounts  CRS Insight IN11272, Required
certain retirement annually. RMD rules typically apply to Minimum Distributions from
plans and accounts taxpayers after reaching age 72 (70½ before Retirement Accounts Under the
2020). This provision would waive minimum Economic Stimulus Proposals
distribution requirements for 2020. Related to the Coronavirus (COVID-
19), by Jane G. Gravelle.
 CRS Insight IN11349, The CARES
Act and Required Minimum
Distributions (RMDs): Options for
Certain Individuals, by Elizabeth A.
Myers.
 CRS In Focus IF11482, Retirement
and Pension Provisions in the
Coronavirus Aid, Relief, and
Economic Security Act (CARES Act),
by John J. Topoleski and
Elizabeth A. Myers
Allowance of partial An above-the-line deduction for cash For more on the tax treatment of
above-the-line contributions of up to $300 would be made charitable contributions, see
deduction for available for taxpayers not itemizing  CRS Report R45922, Tax Issues
charitable deductions in 2020. Relating to Charitable Contributions
contributions and Organizations, by Jane G.
Gravelle, Donald J. Marples, and
Molly F. Sherlock.
 CRS In Focus IF11022, The
Charitable Deduction for
Individuals, by Margot L. Crandall-
Hollick and Molly F. Sherlock.
Modification of Income limits apply to both individual and For more on disaster-related changes
limitations on charitable contribution deductions. This in charitable giving limits, see
charitable provision would suspend the 50% of AGI limit  CRS Report R45864, Tax Policy
contributions during (temporarily 60% for cash contributions and Disaster Recovery, by Molly F.
2020 through 2025) on cash contributions for Sherlock and Jennifer Teefy.
individuals for 2020. The corporate deduction
limit would be increased from 10% of taxable
income to 25% for cash contributions. The For more on the tax treatment of
limit on the deduction of food inventory charitable contributions, see
would be increased from 15% to 25%. The  CRS Report R45922, Tax Issues
increased limits do not apply to contributions Relating to Charitable Contributions
to private foundations and donor-advised and Organizations, by Jane G.
funds. Gravelle, Donald J. Marples, and
Molly F. Sherlock.
 CRS In Focus IF11022, The
Charitable Deduction for

Congressional Research Service 15
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
Individuals, by Margot L. Crandall-
Hollick and Molly F. Sherlock.

Title II, Subtitle C—Business Provisions
Delay of payment of Employers and self-employed individuals For more, see
employer payroll taxes would be able to defer, or postpone, the  CRS Insight IN11260, COVID-19
employer share of the Social Security payroll Economic Stimulus: Business Payroll
tax through the end of 2020. Deferred tax Tax Cuts, by Molly F. Sherlock
liability would be paid in two installments: one and Donald J. Marples.
due by December 31, 2021, and the second by
December 31, 2022. The Social Security trust
funds would not be affected.
Modifications for net The provision would allow carrybacks for up For more, see
operating losses to five years for net operating losses (NOLs)  CRS Insight IN11296, Tax
recorded in tax years 2018, 2019, and 2020. Treatment of Net Operating Losses
NOL carryback capabilities were repealed by (NOLs) in the Coronavirus Aid,
the 2017 tax revision (P.L. 115-97), and were Relief, and Economic Security
previously allowed for up to two years. This (CARES) Act, by Jane G. Gravelle.
provision would also temporarily lift the
income limitation applicable to the corporate  CRS Insight IN11240, COVID-19:
income tax treatment of NOLs under current Potential Role of Net Operating
law. Loss (NOL) Carrybacks in
Addressing the Economic Effects, by
Mark P. Keightley.
 CRS Insight IN11314, Interaction
of International Tax Provisions with
Business Provisions in the CARES
Act, by Jane G. Gravelle
Modification of This provision suspends the limit on For more, see
limitation on losses for deductions for excess business losses for  CRS Insight IN11296, Tax
taxpayers other than 2018-2020. An excess business loss is the Treatment of Net Operating Losses
corporations amount that a taxpayer’s aggregate deductions (NOLs) in the Coronavirus Aid,
attributable to trades and businesses exceeds Relief, and Economic Security
the sum of (1) aggregate gross income or gain (CARES) Act, by Jane G. Gravelle.
attributable to such activities; and (2)
$250,000 ($500,000 if married filing jointly),  CRS Insight IN11240, COVID-19:
adjusted for inflation. For partnerships and S Potential Role of Net Operating
corporations, this provision is applied at the Loss (NOL) Carrybacks in
partner or shareholder level. This provision Addressing the Economic Effects, by
expires after 2025. Mark P. Keightley.

Modification of credit The corporate alternative minimum tax (AMT) For more on the corporate AMT
for prior year minimum was repealed by the 2017 tax revision (P.L. before its repeal, see
tax liability of 115-97). Corporations having AMT credits  CRS In Focus IF10705, Tax
corporations (for prior year AMT payments) were allowed Reform: The Alternative Minimum
to claim the credits against regular tax liability Tax, by Donald J. Marples.
for tax years through 2021. This provision
makes these credits refundable.

Congressional Research Service 16
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Modification of The 2017 tax revision (P.L. 115-97) reduced For more, see
limitation on business the limit on the deduction for net interest  CRS Insight IN11287, Limits on
interest from 50% to 30% of adjusted taxable income Business Interest Deductions Under
(income before taxes, interest deductions, and the Coronavirus Aid, Relief, and
depreciation, amortization or depletion Economic Security (CARES) Act, by
deductions). P.L. 115-97 also eliminated the Jane G. Gravelle.
rule that restricted net interest deduction
limits to firms with a debt-to-equity ratio  CRS Report R45186, Issues in
above 1.5. These revisions were adopted, in International Corporate Taxation:
part, to reduce profit-shifting by multinational The 2017 Revision (P.L. 115-97),
corporations (by borrowing in the United by Jane G. Gravelle and Donald J.
States). This provision would increase the limit Marples.
to 50% for 2019 and 2020.  CRS Insight IN11314, Interaction
of International Tax Provisions with
Business Provisions in the CARES
Act, by Jane G. Gravelle
Technical amendments The 2017 tax revision (P.L. 115-97) increased For more, see
regarding qualified the period for deducting the cost of qualified  CRS In Focus IF11187, Qualified
improvement property improvement property (leasehold, restaurant, Improvement Property and the
and retail property improvements) from 15 2017 Tax Revision (P.L. 115-97),
years to 39 years. This change was apparently by Gary Guenther.
a technical error that also prevented these
investments from being expensed immediately
(sometimes referred to as bonus depreciation).
This provision would allow these investments
to be expensed.

Source: CRS analysis of the CARES Act, March 22, 2020, version. Cloture on the motion to proceed was
rejected in the Senate.

Author Contact Information

Molly F. Sherlock, Coordinator Jane G. Gravelle
Specialist in Public Finance Senior Specialist in Economic Policy
/redacted/@crs.loc.gov , 7-.... /redacted/@crs.loc.gov, 7-....
Margot L. Crandall-Hollick Donald J. Marples
Acting Section Research Manager Specialist in Public Finance
/redacted/@crs.loc.gov , 7-.... /redacted/@c rs.loc.gov, 7-....
Grant A. Driessen
Analyst in Public Finance
/redacted/@crs.loc.gov, 7-....

Acknowledgments
Joseph S. Hughes, Research Assistant in the Government & Finance Division, assisted with updating this
product.

Congressional Research Service R46279 · VERSION 19 · UPDATED 17
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