The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief for Individuals and Businesses (R46279, Version 17, Updated April 1, 2020)

Summary

Version 17 of Congressional Research Service report R46279, updated April 1, 2020, by Molly F. Sherlock, Margot L. Crandall-Hollick, Grant A. Driessen, Jane G. Gravelle and Donald J. Marples, on the tax provisions of the enacted CARES Act (P.L. 116-136). It traces the bill from S. 3548 through the failed March 22 cloture vote to Senate passage by 96-0 on March 25 and House passage on March 27, 2020. The Joint Committee on Taxation estimated the tax provisions would cost $578.0 billion over FY2020 through FY2030. Individuals get a recovery rebate of $1,200 ($2,400 for married joint filers) plus $500 per child, phased out above $75,000 of AGI, and businesses get a delay of employer payroll taxes and more generous treatment of net operating losses.

Summary drafted by a model from the document's text below and checked by script against that text before publication. It is a navigation aid, not a reading of what the document proves. Where AI is used

Full text

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 1, 2020

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

ongress is considering a number of proposals that seek to mitigate the economic effects of

C the Coronavirus disease 2019, or COVID-19, pandemic. One such proposal, the
Coronavirus Aid, Relief, and Economic Security (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 A third
version of the CARES Act was released on March 25, 2020.2 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 (P.L.
116-136) into law.
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.
This is the latest in a series of legislative packages addressing the COVID-19 pandemic. Two
other bills have been enacted into law: 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 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. For more information on the tax
provision in this proposal, see CRS Report R46283, The Take Responsibility for Workers and
Families Act: Division T—Revenue Provisions, coordinated by Molly F. Sherlock.
This report briefly summarizes the major individual and business tax provisions of the CARES
Act, as passed in the Senate on March 25, 2020 (Table 1). The Joint Committee on Taxation
(JCT) estimated that the individual and business tax provisions in the CARES Act would reduce
federal tax revenue by $578.0 billion over the 10-year FY2020 through FY2030 budget window.3
JCT’s estimates are included in this report’s Appendix. The report also summarizes tax provisions
in earlier versions of the CARES Act—the version released March 22, 2020 (Table 2), as well as
Division B of the first version of the CARES Act (S. 3548) (Table 3).4 Links to CRS resources
that offer additional information are provided.

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

00078.
2 See https://www.appropriations.senate.gov/news/senate-passes-critical-bipartisan-legislation-to-address-national-

coronavirus-crisis.
3 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-11-20, March 26, 2020, at https://www.jct.gov/publications.html?func=startdown&id=5252.
4 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 1
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

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 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 married Summary of the 2020 Recovery
joint filers). Rebates in the CARES Act (P.L.
Taxpayers eligible for the credit could also 116-136), by Margot L.
receive $500 for each child eligible for the child Crandall-Hollick.
tax credit.  CRS Insight IN11270, COVID-19
The total credit to phase out at a rate of 5% of and Direct Payments to Individuals:
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
Jameson A. Carter.
Generally, all individuals must have Social
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). Will Social Security and
Taxpayers must have filed a 2019 return (or Supplemental Security Income
filed a 2018 return if they did not file a 2019 Beneficiaries Receive the Recovery
return) in order to get a rebate in 2020. For Rebate in the CARES Act?, by Paul
Social Security and Railroad Retirement S. Davies and William R.
recipients, if neither a 2019 nor a 2018 income Morton.
tax return were filed, the law allows the IRS to  CRS Insight IN11247, COVID-19
use information from their 2019 Social Security and Direct Payments to Individuals:
or Railroad Retirement Benefit Statement (SSA- Considerations on Using Advanced
1099 or RRB-1099, respectively). Otherwise, Refundable Credits as Economic
the rebate could be claimed on a 2020 income Stimulus, by Margot L. Crandall-
tax return. Hollick.
 CRS Insight IN11256, COVID-19
and Direct Payments to Individuals:
Historical Precedents, by Gene
Falk.
 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 provision For more, see
retirement funds would provide 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 would 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 Report R45864, Tax Policy
regard to the year’s contribution cap. For and Disaster Recovery, by Molly F.
coronavirus-affected individuals, loan limits from Sherlock and Jennifer Teefy.
retirement plans would be increased from  CRS In Focus IF11447, COVID-
$50,000 to $100,000 and the repayment 19: Social Insurance and Other

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

Provision Description CRS Resources
deadline is delayed for loans that are due in Income-Support Options for Those
2020. 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 would Retirement Accounts Under the
waive minimum distribution requirements for Economic Stimulus Proposals
2020. Related to the Coronavirus
(COVID-19), by Jane G. Gravelle.
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 deductions.  CRS Report R45922, Tax Issues
charitable 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
limitations on charitable contribution deductions. This changes 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 through and Disaster Recovery, by Molly F.
2020 2025) on cash contributions for individuals for Sherlock and Jennifer Teefy.
2020. The corporate deduction limit would be
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 would be increased charitable contributions, see
from 15% to 25%. The increased limits do not  CRS Report R45922, Tax Issues
apply to contributions to private foundations Relating to Charitable
and 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 3
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources

Exclusion for certain Would temporarily expand 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. Under current law,  CRS Report R41967, Higher
employers can provide their employees with up Education Tax Benefits: Brief
to $5,250 per employee per year in educational Overview and Budgetary Effects,
assistance—generally for tuition, fees, and by Margot L. Crandall-Hollick.
related supplies—that is excluded from wages
(and hence not subject to income or payroll
taxes). Under this provision, qualified student
loan payments would be subject to the overall
cap of $5,250 per employee per year.
Payments made by the employer could go to
the employee directly or to the lender.
Payments could cover both the principal and
interest of the qualified student loan. Qualified
student loans would be those eligible for the
student loan interest deduction (IRC Section
221(d)(1)) that are incurred by the employee
for the employee’s education. This provision
would apply 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 Would create a refundable payroll tax credit For background, 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 The Employee Retention Tax
to COVID-19 could 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
computing the credit.
Eligible employers are those who (1) were
required to fully or partially suspend operations
due to a COVID-19-related order (includes
nonprofit employers); or (2) have gross receipts
50% less than gross receipts in the same quarter
in the prior calendar year.
Qualified wages depend on the number of
employees the employer had during 2019. If the
employer had more than 100 full-time
employees, qualifying wages are wages paid
when employee services are not provided (with
qualifying wages limited to the amount the
employee would have been paid for working an
equivalent duration during the 30 days
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 would not apply to government
employers. The Social Security trust funds
would not be affected.

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

Provision Description CRS Resources

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
the end of 2020. Deferred tax liability would be Payroll Tax Cuts, by Molly F.
paid in two installments: one due by December Sherlock and Donald J. Marples.
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 to For more, see
operating losses five years for net operating losses (NOLs)  CRS Insight IN11296, Tax
recorded in tax years 2018, 2019, and 2020. Treatment of Net Operating
NOL carryback capabilities were repealed by Losses (NOLs) in the Coronavirus
the 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 would also temporarily lift 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.
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 would increase the limit J. Marples.
to 50% for 2019 and 2020.
Technical The 2017 tax revision (P.L. 115-97) increased For more, see
amendments regarding the period for deducting the cost of qualified  CRS In Focus IF11187, Qualified
qualified improvement improvement property (leasehold, restaurant, Improvement Property and the
property and retail property improvements) from 15

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

Provision Description CRS Resources
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 would allow 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 would exempt distilled spirits used to Lowry.
make hand sanitizer for 2020.

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

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

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

Provision Description CRS Resources
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 Report R45864, Tax Policy
three years without regard to the year’s and Disaster Recovery, by Molly F.
contribution cap. For coronavirus-affected Sherlock and Jennifer Teefy.
individuals, loan limits from retirement plans  CRS In Focus IF11447, COVID-19:
would be increased from $50,000 to $100,000 Social Insurance and Other Income-
and the repayment deadline is delayed for Support Options for Those Unable
loans that are due in 2020. 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.
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.

Congressional Research Service 7
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.

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.
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.
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),

Congressional Research Service 8
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources
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.
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.

Table 3. 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 Insight IN11234, Tax Cuts as
liability.
Fiscal Stimulus: Comparing a Payroll
Taxpayers eligible for the credit can also Tax Cut to a One-Time Tax Rebate,
receive $500 for each child eligible for the by Molly F. Sherlock and Donald J.
child credit. Marples.
The total credit phases out at a rate of 5% of  CRS Report RS21126, Tax Cuts
adjusted gross income (AGI) above $75,000 and Economic Stimulus: How
($150,000 for married joint returns). Effective Are the Alternatives?, by
All individuals must have Social Security Jane G. Gravelle.
numbers.
Taxpayers must have filed a 2018 return (or
file a 2019 return if they did not file a 2018
return) in order to get a rebate in 2020.
Otherwise, it can be claimed on a 2020
income tax return.

Congressional Research Service 9
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

Provision Description CRS Resources

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.a Allows disasters, see
individuals required to make estimated tax  CRS Report R45864, Tax Policy
payments to postpone such payments until and Disaster Recovery, by Molly F.
October 15, 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 Expenses, by John J. Topoleski and
taxpayers can recontribute funds to an eligible Elizabeth A. Myers.
retirement plan in the first year or within
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  CRS In Focus IF11447, COVID-19:
and the repayment deadline is delayed for Social Insurance and Other Income-
loans that are due in 2020. 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.

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

Provision Description CRS Resources

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)  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 Loss
law. (NOL) Carrybacks in Addressing the
Economic Effects, by Mark P.
Keightley.
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.
Marples.

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

Provision Description CRS Resources
States). This provision would increase the limit
to 50% for 2019 and 2020.
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
(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.

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

Appendix. Revenue Losses from the CARES Act
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 $578.0
billion for FY2020 through FY2030 (see Table A.1). 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 $169.6 billion, is that which allows noncorporate business taxpayers NOL
carrybacks.

Congressional Research Service 13
Table A.1. Revenue Losses from the CARES Act Individual and Business Tax Provisions, FY2020 - FY2030
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-14
Provision 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2020-2030

Modification of limitation 74,339 66,271 3,664 3,591 3,494 3,428 3,243 2,994 2,946 2,859 2,780 169,609
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 705,996 254,651 -172,968 -170,236 -6,419 -10,286 -10,384 -6,461 -3,956 -708 -1,262 577,968

Source: Joint Committee on Taxation, JCX-11-20, March 26, 2020, at https://www.jct.gov/publications.html?func=startdown&id=5252.
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-15
The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief

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/@crs.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 17 · UPDATED 16
EveryCRSReport.com

The Congressional Research Service (CRS) is a federal legislative branch agency, housed inside the
Library of Congress, charged with providing the United States Congress non-partisan advice on
issues that may come before Congress.

EveryCRSReport.com republishes CRS reports that are available to all Congressional staff. The
reports are not classified, and Members of Congress routinely make individual reports available to
the public.

Prior to our republication, we redacted phone numbers and email addresses of analysts who
produced the reports. We also added this page to the report. We have not intentionally made any
other changes to any report published on EveryCRSReport.com.

CRS reports, as a work of the United States government, are not subject to copyright protection in
the United States. Any CRS report may be reproduced and distributed in its entirety without
permission from CRS. However, as a CRS report may include copyrighted images or material from a
third party, you may need to obtain permission of the copyright holder if you wish to copy or
otherwise use copyrighted material.

Information in a CRS report should not be relied upon for purposes other than public
understanding of information that has been provided by CRS to members of Congress in
connection with CRS' institutional role.

EveryCRSReport.com is not a government website and is not affiliated with CRS. We do not claim
copyright on any CRS report we have republished.

File and source

File: R46279.621512.pdf
Size: 1,235,765 bytes
SHA-256: 573bbb9e7c147fa3c007a34e958873004e9331801e322fb96edea8ad1f310f79
Our copy: R46279.621512.pdf
Original: www.everycrsreport.com