New Stimulus Package Makes PPP, FFCRA, and Other Changes

Updated: 7/13/2022

The Consolidated Appropriations Act (CAA) was signed into law on December 27, 2020. The CAA provides various forms of stimulus and support including extensions and changes to earlier COVID-related legislation. A summary of these measures is below.

Note: On March 11, 2021, President Biden signed the American Rescue Plan Act (ARPA), which further amended some of the programs discussed below. For more information, see the ARPA section. Some of the content on the page below has been removed because it was based on a provision in the law that now has expired.

Employee Social Security Tax Deferral Repayment Deadline Extended

On August 8, 2020, President Trump issued a memorandum to allow employers to defer withholding employees' share of social security taxes from September through December of 2020; and required employers that chose to participate to withhold and pay the deferred amounts "ratably" from wages paid from January through April 2021. The CAA extends the repayment period for any amounts deferred through December 31, 2021. However, the CAA doesn't authorize further deferrals after 2020.

As a result, participating employers should generally offer employees who elected the deferral a one-year repayment schedule, which would reduce per-paycheck deduction amounts. However, employees may prefer to retain the four-month repayment schedule, which would result in roughly corresponding amounts withheld from 2021 paychecks compared to amounts deferred from 2020 paychecks.

Tax Exclusion for Employer Student Loan Repayment Benefits Extended

The CARES Act provided that employers may contribute up to $5,250 annually toward an employee's student loans, and such payment would be excluded from the employee's income as well as employment taxes. The $5,250 cap applies to both the student loan repayment benefit as well as other educational assistance (e.g., tuition, fees, books) provided by the employer under Section 127 of the Internal Revenue Code (IRC). The provision originally applied to student loan payments made by an employer through 2020. The CAA extends the tax treatment of such payments through 2025.

Tax Extenders

The CAA also includes an extension of several tax provisions which were set to expire at the end of 2020, including the Work Opportunity Tax Credit, Empowerment Zone Employment Credit, and the Employer Credit for Paid Family and Medical Leave, each of which received a five-year extension through 2025. The Indian Employment Credit was extended through 2021.