Information on the Consolidated Appropriations Act, 2021 (CAA2021)

On December 21, 2020, the House and Senate passed the Consolidated Appropriations Act, 2021 (CAA2021). President Trump has threatened to veto the bill if stimulus payments to individuals are not increased. The bill provides significant tax and non-tax stimulus to businesses and individuals. Below is a summary of the key provisions as they currently stand:


  • Paycheck Protection Program (PPP)
    1. The bill specifies that business expenses paid with forgiven PPP loans are tax-deductible. The forgiven debt will also be excluded from taxable income.
    2. Creates a simplified forgiveness application process for loans of $150,000 or less.
    3. Repeals the requirement that PPP borrowers deduct the amount of any EIDL advance from their PPP forgiveness amount.
    4. PPP Round 2 (PPP2)
      1. PPP2 loans will be available to first-time qualified borrowers and, to businesses that previously received a PPP loan. Previous PPP recipients may apply for another loan of up to $2 million, provided they:
        1. Have 300 or fewer employees.
        2. Have used or will use the full amount of their first PPP loan.
        3. Can show a 25% gross revenue decline in any 2020 quarter compared with the same quarter in 2019.
      2. PPP2 will also make forgivable loans available to certain Sec. 501(c)(6) nonprofit organizations.
      3. The bill allows borrowers who returned all or part of a previous PPP loan to reapply for the maximum loan amount available to them.
      4. PPP loan terms
        1. Costs eligible for loan forgiveness include payroll, rent, covered mortgage interest and utilities. PPP2 also makes the following expenditures potentially forgivable:
          • Covered worker protection and facility modification expenses, including personal protection equipment to comply with COVID-19 federal health and safety guidelines.
          • Covered operating costs such as software and cloud computing and accounting needs.
          • Covered property damage costs – Damage and vandalism or looting due to public disturbances occurring in 2020 not covered by insurance.
          • Covered supplier costs – Expenditures made by an entity to a supplier of goods that are essential to the operations and made pursuant to a contract or purchase order that is either in effect before the covered period of the loan or, with respect to perishable goods, that is in effect before or at any time during the covered period of the loan.
        2. To be eligible for loan forgiveness, PPP borrowers will have to spend no less than 60% of the funds on payroll related expenditures over a covered period of 8 or 24 weeks – the same guidelines as PPP1.
        3. Borrowers may receive a loan amount of up to 2.5 times their average monthly payroll costs in the year prior to the loan or the calendar year (same as PPP1). The maximum loan is $2 million
        4. PPP borrowers in certain industries (hotels and restaurants) can receive up to 3.5 times their average monthly payroll costs, subject to the $2 million maximum.
  • Employers are allowed to defer payment of the employer share of the social security tax they are responsible for paying the federal government through April 30, 2021. This is an extension of the original provision that was to end on December 31, 2020. The provision requires that the deferred employment tax be paid back over the following two years.
  • Allows a 100% business deduction for meals (currently 50%) as long as the expense is for food or beverages provided by a restaurant. This provision is effective January 1, 2021 and expires at the end of 2022.
  • Support for entertainment venues – $15 billion of allocated funds for struggling live venues, independent movie theaters and cultural institutions.
  • Support for business in low-income communities – $12 billion earmarked for businesses in low income and minority communities.
  • Economic Injury Disaster Loan Grants – $20 billion of additional funds to be administered through the Economic Injury Disaster Loan (EIDL) program, dedicated to businesses in low income communities.
  • Childcare centers – $10 billion allocated to help childcare centers safely reopen and to support families with childcare costs.
  • Transportation – A variety of transportation-related assistance that includes $16 billion for the airlines, $14 billion for mass transit agencies, $10 billion for highways and $1 billion for Amtrak.


  • Stimulus Payments – This is the section of the bill President Trump has indicated he would like to see amended.
    1. Rebates up to $600 for single filers and $1,200 for joint filers (with amounts increased by $600 per child under the age of 17 who meet the definition of a “qualifying dependent”). Payments start phasing out for those with $75,000 in adjusted gross income for individuals, $112,400 for head of household and $150,000 for married couples. For those with no children, the benefit completely phases out at $99,000 and $198,000 for married couples.
    2. The IRS could start issuing payments within one to two weeks. The IRS will be able to move faster for people who have filed 2019 tax returns with direct deposit information. It will be significantly slower for those who will need paper checks.
    3. The government will use 2019 tax returns to set payment amounts and 2018 tax returns if 2019 is not available.
    4. The final amount of all benefits will be determined based on 2020 income and settled on the 2020 tax return. If once you file your 2019 and 2020 returns, you were entitled to a smaller stimulus payment than you actually received, you will not have to pay it back.
    5. The stimulus will not be considered taxable income.
  • Unemployment
    1. The Pandemic Unemployment Assistance Program is extended through March 14, 2021 to provide payments to those not traditionally eligible for unemployment benefits (self-employed, independent contractors) who are unable to work as a direct result of COVID-19.
    2. For weeks beginning after December 26, 2020, an additional $300 will be paid to recipients of unemployment insurance or Pandemic Unemployment Assistance.
    3. The Pandemic Emergency Unemployment Compensation Program is also extended through March 14, 2021, providing an additional 11 weeks (for a total of 24 weeks) of unemployment benefits to help those who remain unemployed after state unemployment benefits are no longer available.
    4. Mixed Earner Unemployment Compensation allows for an additional $100 to be paid to individuals receiving at least $5,000 of self-employment income in the most recent taxable year.

Lutz, Selig & Zeronda, L.LP. is here to serve as your trusted advisor as we navigate these difficult times. Please do not hesitate to contact us with any questions.