The Coronavirus Aid, Relief, and Economic Security (CARES) Act—Tax Relief for Individuals and Businesses (R46279, Version 8, Updated March 26, 2020)

Summary

Version 8 of Congressional Research Service report R46279, updated March 26, 2020 and coordinated by Molly F. Sherlock, on the tax provisions of the CARES Act as passed by the Senate. It records that a third version was released on March 25, 2020 and that the Senate voted 96-0 that day to pass H.R. 748 amended with the CARES Act, with House action still to come. The rebate would be $1,200, or $2,400 for married joint filers, plus $500 per child, phasing out above $75,000 of AGI. Coronavirus-affected individuals could withdraw up to $100,000 from retirement plans without the 10% early withdrawal penalty. The report also compares the Senate-passed bill with the March 22, 2020 version and the first bill, S. 3548.

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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 March 26, 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 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.
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 bills
have already 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 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).3 Links to CRS
resources that offer additional information are provided.

1 The Senate vote was on an amendment to H.R. 748, which was used as a legislative vehicle for the amended version

of the CARES Act. 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 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.

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

Table 1. Individual and Business Tax Provisions in the CARES Act,
as Passed by the Senate on March 25, 2020
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 IN11268, COVID-19
information from 2019 income tax returns. and Stimulus Payments to
Credit would equal $1,200 ($2,400 for married Individuals: Summary of the 2020
joint filers). Recovery Rebates in the March 22
Taxpayers eligible for the credit could also CARES Act, 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 the March 22 CARES
$150,000 for married joint returns). Act on Family Incomes, by Conor
F. Boyle and Jameson A. Carter.
Generally, all individuals must have Social
Security numbers. (Among members of the  CRS Insight IN11255, COVID-19
armed forces, only one spouse must have an and Stimulus Payments to
SSN). Individuals: How Did the 2008
Taxpayers must have filed a 2019 return (or Recovery Rebates Work?, by
filed a 2018 return if they did not file a 2019 Margot L. Crandall-Hollick.
return) in order to get a rebate in 2020. (For  CRS Insight IN11247, COVID-19
seniors that did not file a 2019 or 2018 income and Stimulus Payments to
tax return, information from their 2019 Social Individuals: Considerations on
Security benefit statement or, for Railroad Using Advanced Refundable
Retirement beneficiaries, their 2019 Social Credits as Economic Stimulus, by
Security equivalent benefit statement, can be Margot L. Crandall-Hollick.
used instead.) Otherwise, it could be claimed on  CRS Insight IN11256, COVID-19
a 2020 income tax return. 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
deadline is delayed for loans that are due in Income-Support Options for Those
2020.

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

Provision Description CRS Resources
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.

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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 IN11260, COVID-19
subject to closure due employers. Up to $10,000 in qualified wages Economic Stimulus: Business
to COVID-19 could be taken into account per employee in Payroll Tax Cuts, by Molly F.
determining the credit amount. Health plan Sherlock and Donald J. Marples.
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,
limited to 30 days per employee. 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.
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,

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

Provision Description CRS Resources
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 IN11240, COVID-19:
recorded in tax years 2018, 2019, and 2020. Potential Role of Net Operating
NOL carryback capabilities were repealed by Loss (NOL) Carrybacks in
the 2017 tax revision (P.L. 115-97), and were Addressing the Economic Effects,
previously allowed for up to two years. This by Mark P. Keightley.
provision would also temporarily lift the income
limitation applicable to the corporate income
tax treatment of NOLs under current law.
Modification of This provision allows taxpayers not subject to For more, see
limitation on losses the corporate income tax that incur NOLs,  CRS Insight IN11240, COVID-19:
for taxpayers other including pass-through businesses and sole Potential Role of Net Operating
than corporations proprietorships, to receive the temporary NOL Loss (NOL) Carrybacks in
carryback capabilities provided to corporations, Addressing the Economic Effects,
as described above. 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 Report R45186, Issues in
interest to 30% of adjusted taxable income (income International Corporate Taxation:
before taxes, interest deductions, and The 2017 Revision (P.L. 115-97),
depreciation, amortization or depletion by Jane G. Gravelle and Donald
deductions). P.L. 115-97 also eliminated the rule J. Marples.
that restricted net interest deduction limits to
firms with a debt-to-equity ratio above 1.5.
These revisions were adopted, in part, to
reduce profit-shifting by multinational
corporations (by borrowing in the United
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 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 2017 Tax Revision (P.L. 115-97),
years to 39 years. This change was apparently a by Gary Guenther.
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.
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.

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

Source: CRS analysis of the CARES Act, as the Senate passed on March 25, 2020.

Table 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 IN11255, COVID-19
information from 2019 income tax returns. and Stimulus Payments to
Credit would equal $1,200 ($2,400 for Individuals: How Did the 2008
married joint filers). Recovery Rebates Work?, by
Taxpayers eligible for the credit could also Margot L. Crandall-Hollick.
receive $500 for each child eligible for the  CRS Insight IN11247, COVID-19
child tax credit. and Stimulus Payments to
The total credit to phase out at a rate of 5% Individuals: Considerations on Using
of adjusted gross income (AGI) above $75,000 Advanced Refundable Credits as
($112,500 for head of household filers, Economic Stimulus, by Margot L.
$150,000 for married joint returns). Crandall-Hollick.
Generally, all individuals must have Social  CRS Insight IN11256, COVID-19
Security numbers. (Among members of the and Direct Payments to Individuals:
armed forces, only one spouse must have an Historical Precedents, by Gene
SSN). Falk.
Taxpayers must have filed a 2019 return (or  CRS Insight IN11234, Tax Cuts as
filed a 2018 return if they did not file a 2019 Fiscal Stimulus: Comparing a Payroll
return) in order to get a rebate in 2020. (For Tax Cut to a One-Time Tax Rebate,
seniors that did not file a 2019 or 2018 by Molly F. Sherlock and Donald
income tax return, information from their J. Marples.
2019 Social Security benefit statement or, for  CRS Report RS21126, Tax Cuts
Railroad Retirement beneficiaries, their 2019 and Economic Stimulus: How
Social Security equivalent benefit statement, Effective Are the Alternatives?, by
can be used instead.) Otherwise, it could be Jane G. Gravelle.
claimed on a 2020 income tax return.
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.

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

Provision Description CRS Resources

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, 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 IN11240, COVID-19:
recorded in tax years 2018, 2019, and 2020. Potential Role of Net Operating
NOL carryback capabilities were repealed by Loss (NOL) Carrybacks in
the 2017 tax revision (P.L. 115-97), and were Addressing the Economic Effects, by
previously allowed for up to two years. This Mark P. Keightley.
provision would also temporarily lift the
income limitation applicable to the corporate
income tax treatment of NOLs under current
law.
Modification of This provision allows taxpayers not subject to For more, see
limitation on losses for the corporate income tax that incur NOLs,  CRS Insight IN11240, COVID-19:
taxpayers other than including pass-through businesses and sole Potential Role of Net Operating
corporations proprietorships, to receive the temporary Loss (NOL) Carrybacks in

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

Provision Description CRS Resources
NOL carryback capabilities provided to Addressing the Economic Effects, by
corporations, as described above. 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 Report R45186, Issues in
interest from 50% to 30% of adjusted taxable income International Corporate Taxation:
(income before taxes, interest deductions, and The 2017 Revision (P.L. 115-97),
depreciation, amortization or depletion by Jane G. Gravelle and Donald J.
deductions). P.L. 115-97 also eliminated the Marples.
rule that restricted net interest deduction
limits to firms with a debt-to-equity ratio
above 1.5. These revisions were adopted, in
part, to reduce profit-shifting by multinational
corporations (by borrowing in the United
States). This provision would increase the limit
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 Stimulus Payments to
Credit equals the greater of Individuals: How Did the 2008
(1) taxpayer’s net income tax liability up to Recovery Rebates Work?, by
$1,200 ($2,400 for married joint filers). Net Margot L. Crandall-Hollick.
income tax liability is income tax liability before  CRS Insight IN11247, COVID-19
the child tax credit and refundable tax credits and Stimulus Payments to
(like the EITC); or Individuals: Considerations on Using
(2) $600 ($1,200 for married joint filers) if the Advanced Refundable Credits as
taxpayer has qualifying income. To have Economic Stimulus, by Margot L.
qualifying income, taxpayer must have either Crandall-Hollick.
(a) at least $2,500 in total of earned income,

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

Provision Description CRS Resources
Social Security income, or veterans’ benefits,  CRS Insight IN11256, COVID-19
or (b) gross income above the taxpayer’s and Direct Payments to Individuals:
standard deduction and $1 of net income tax Historical Precedents, by Gene Falk.
liability.  CRS Insight IN11234, Tax Cuts as
Taxpayers eligible for the credit can also Fiscal Stimulus: Comparing a Payroll
receive $500 for each child eligible for the Tax Cut to a One-Time Tax Rebate,
child credit. by Molly F. Sherlock and Donald J.
The total credit phases out at a rate of 5% of Marples.
adjusted gross income (AGI) above $75,000  CRS Report RS21126, Tax Cuts
($150,000 for married joint returns). and Economic Stimulus: How
All individuals must have Social Security Effective Are the Alternatives?, by
numbers. Jane G. Gravelle.
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.
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
(temporarily 60% for cash contributions

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

Provision Description CRS Resources
contributions during through 2025) on cash contributions for  CRS Report R45864, Tax Policy
2020 individuals for 2020. The corporate deduction and Disaster Recovery, by Molly F.
limit would be increased from 10% of taxable Sherlock and Jennifer Teefy.
income to 25% for cash contributions. The
limit on the deduction of food inventory
would be increased from 15% to 25%. The For more on the tax treatment of
increased limits do not apply to contributions charitable contributions, see
to private foundations and donor-advised  CRS Report R45922, Tax Issues
funds. Relating to Charitable 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.
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 IN11240, COVID-19:
recorded in tax years 2018, 2019, and 2020. Potential Role of Net Operating Loss
NOL carryback capabilities were repealed by (NOL) Carrybacks in Addressing the
the 2017 tax revision (P.L. 115-97), and were Economic Effects, by Mark P.
previously allowed for up to two years. This Keightley.
provision would also temporarily lift the
income limitation applicable to the corporate
income tax treatment of NOLs under current
law.
Modification of This provision allows taxpayers not subject to For more, see
limitation on losses the corporate income tax that incur NOLs,  CRS Insight IN11240, COVID-19:
for taxpayers other including pass-through businesses and sole Potential Role of Net Operating Loss
than corporations proprietorships, to receive the temporary (NOL) Carrybacks in Addressing the
NOL carryback capabilities provided to Economic Effects, by Mark P.
corporations, as described above. 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 Report R45186, Issues in
interest from 50% to 30% of adjusted taxable income International Corporate Taxation:

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

Provision Description CRS Resources
(income before taxes, interest deductions, and The 2017 Revision (P.L. 115-97), by
depreciation, amortization or depletion Jane G. Gravelle and Donald J.
deductions). P.L. 115-97 also eliminated the Marples.
rule that restricted net interest deduction
limits to firms with a debt-to-equity ratio
above 1.5. These revisions were adopted, in
part, to reduce profit-shifting by multinational
corporations (by borrowing in the United
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 the U.S. Department of the Treasury’s March 18, 2020, press release,
“Treasury and IRS Issue Guidance on Deferring Tax Payments Due to COVID-19 Outbreak,” at

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

b. https://home.treasury.gov/news/press-releases/sm948. Subsequently, the Treasury announced via tweet that
the tax filing deadline would also be moved to July 15, 2020.

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-....

Congressional Research Service R46279 · VERSION 8 · UPDATED 12
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