COVID-19 and Direct Payments: Comparison of First and Second Round of “Stimulus Checks” to a Proposed Third Round in House Reconciliation Legislation (IN11605, Version 1)
Summary
Insight IN11605, Version 1, of the Congressional Research Service, dated February 17, 2021, comparing the first and second rounds of direct payments, or stimulus checks, with the third round proposed in House reconciliation legislation released on February 8, 2021 by Ways and Means Committee Chairman Richard E. Neal. The proposed third round pays $1,400 per eligible individual, $2,800 for married joint filers and $1,400 for each dependent, against $1,200 and $600 per individual in the first and second rounds. It would phase out between $75,000 and $100,000 for singles and between $150,000 and $200,000 for married joint filers.
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INSIGHTi
COVID-19 and Direct Payments:
Comparison of First and Second Round of
“Stimulus Checks” to a Proposed Third
Round in House Reconciliation Legislation
February 17, 2021
On February 8, 2021, House Ways and Means Committee Chairman Richard E. Neal released several
legislative proposals to address the Coronavirus Disease 2019 (COVID-19) pandemic. One proposal,
Subtitle G, “Budget Reconciliation Legislative Recommendations Relating to Promoting Economic
Security,” included a third round of direct payments (often referred to as “stimulus checks”). A first round
of direct payments was enacted in the CARES Act (P.L. 116-136) in March 2020. The second round of
direct payments was enacted in the Consolidated Appropriations Act, 2021 (P.L. 116-260) in December
2020.
This Insight compares some of the major aspects of the proposed third round of direct payments to the
first and second round. A summary of the proposed third round of direct payments can be found here.
Table 1. Major Provisions of First, Second, and Proposed Third Round of Direct Payments
First Round of Direct Payments Second Round of Direct
(CARES Act | P.L. 116-136, as Payments Proposed Third Round of
amended)a (P.L. 116-260) Direct Payments
Payment amount $1,200 per eligible individual $600 per eligible individual $1,400 per eligible individual
$2,400 for married joint filers $1,200 for married joint filers $2,800 for married joint filers
Additional $500 for each qualifying Additional $600 for each Additional $1,400 for each
child (i.e., dependent child under 17 qualifying child (i.e., dependent dependent (including older
years old as defined for the child child under 17 years old as children and adult dependents).
credit). defined for the child credit).
Phaseout Total payment amount phased out by Same as first round Total payment phases out
5% of adjusted gross income over ratably between following
thresholds: income levels:
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First Round of Direct Payments Second Round of Direct
(CARES Act | P.L. 116-136, as Payments Proposed Third Round of
amended)a (P.L. 116-260) Direct Payments
$75,000 singles (S) $75,000-$100,000 S
$112,500 heads of households (HOH) $112,500-$150,000 HOH
$150,000 married filing jointly (MFJ) $150,000-$200,000 MFJ
Eligibility Everyone except:b Everyone except :b Everyone except :b
Nonresident aliens Nonresident aliens Nonresident aliens
Dependents of other taxpayers Dependents of other Dependents of other
taxpayers taxpayers
Individuals who died before Individuals who died before
January 1, 2020 January 1, 2021
ID requirement Unmarried individuals: Eligible Same as first round Unmarried individuals: Same
individuals must have had a Social as first and second rounds.
Security number (SSN).
Married individuals: Eligible Married individuals: Same as
individuals must have had an SSN. If first and second rounds.
one otherwise eligible spouse did not
have an SSN, maximum amount halved
(i.e., $1,200 for married joint filers).
Qualifying children. If an eligible Qualifying dependent: If an
unmarried individual did not have an eligible individual does not have
SSN, or neither spouse of a married an SSN or neither spouse of a
joint filer had an SSN, the household married joint filer has an SSN,
could not receive any amount for a the household could receive any
qualifying child with an SSN.c amount for a qualifying child with
an SSN.c
Type of SSN: For all eligible Type of SSN: For all eligible
individuals and qualifying children, individuals and dependents, SSNs
SSNs must generally be associated may or may not be associated
with work authorization. with work authorization.
Automatic Payments automatically issued based Payments automatically issued Payments automatically issued
Issuance of on information from 2019 tax returns based on information from 2019 based on information from 2020
Payments to Tax or, if unavailable, 2018 returns. tax returns. tax returns or, if unavailable,
Filers 2019 returns.
If 2020 tax return information
would result in a larger payment,
the IRS is directed to top-up
payments in 2021 after it
processes 2020 returns.
Automatic For eligible nonfilers who were For eligible nonfilers who were For eligible nonfilers (individuals
Issuance of recipients of Social Security, recipients of Social Security, SSI, who did not file a 2020 or 2019
Payments to Supplemental Security Income (SSI), or or certain VA benefits, Treasury income tax return), the IRS
Certain certain Department of Veterans was directed to issue payments would be given broad authority
Households Not Affairs (VA) benefits, Treasury based on information provided by to make payments based on
Required to File a generally issued payments based on the Social Security Administration information available to the
Tax Return their 2019 annual benefit statements (SSA), Railroad Retirement Board, Treasury.d
(“Eligible (e.g., SSA-1099 or RRB-1099). or VA (including but not limited
Nonfilers”) to annual benefit statements).d
Offset and All rounds of payments are structured as an advance of a temporary tax credit. Offset and garnishment/levy provisions
Reduction for Past- tend to differ depending on whether this benefit is received as an “advanced credit” (referred to simply as a “payment” in
this Insight) or claimed as a tax credit on the applicable tax return.
Congressional Research Service 3
First Round of Direct Payments Second Round of Direct
(CARES Act | P.L. 116-136, as Payments Proposed Third Round of
amended)a (P.L. 116-260) Direct Payments
Due Debts Offset of Payment: Payments could Offset of Payment: Same as Offset of Payment: Same as
not be offset—or reduced before first round, except these payments second round.
issuance—to satisfy certain debts also could not be offset for child
owed to governmental agencies. Such support debt.
exempt debts included tax debts,
debts owed to federal agencies, and
unemployment compensation debts,
but did not include child support debt.
Offset of Credit on Tax Return: Offset of Credit on Tax Offset of Credit on Tax
Treasury may offset the amount of the Return: Same as first round. Return: Same as first round
direct payment that the taxpayer (applicable benefit claimed on
claims as a credit on their 2020 2021 return.)
income tax returns.
Garnishment: Not addressed. Garnishment: Payments would Garnishment: Not addressed.
generally be exempt from debt
collection actions, such as
garnishment or levy, that occur
after the Treasury issues the
payments. These protections only
apply insofar as the payment is
received as an advance credit.
Budgetary Cost $292.4 billion $164.1 billion $422.3 billion
FY2020-FY2030 FY2021-FY2030 e FY2021-FY2031
Source: CRS analysis of P.L. 116-260; P.L. 116-136; Subtitle G of the Ways and Means Proposal posted on February 8,
2021; and JCX-11R-20, JCX-24-20, JCX-9-21.
Notes: The second (and proposed third) round of payments are (would be) extended to the U.S. territories in a manner
similar to the first round of payments.
a. P.L. 116-260 amended ID requirements of the first round of payments, clarified issues for representative payees, and
modified provisions affecting offset of the payments when claimed as a tax credit on 2020 returns.
b. Estates and trusts are ineligible to receive the first, second, and proposed third rounds of payments.
c. Households can also receive additional amounts for qualifying children if those children have adoption taxpayer IDs
(ATINs).
d. If a direct payment for a recipient of a federal benefit program is deposited into the account of a representative payee
or fiduciary, the law explicitly states that it shall be used only for the benefit of the entitled beneficiary.
e. Budgetary cost estimates reflect the score for a second round of payments only. P.L. 116-260 includes retroactive
modifications to the first round of payments, estimated to cost an additional $1.6 billion between FY2021 and
FY2030.
Author Information
Margot L. Crandall-Hollick
Acting Section Research Manager
Congressional Research Service 4
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