Second Stimulus Bill: 3 Ways You May Benefit Even If You Don’t Receive A Stimulus Check

The Senate is expected to propose a new stimulus bill next week when they return from their current recess. The proposal is widely expected to include a second stimulus check. However, there are conflicting reports on how much the next check might be and what the income limitations will be.

The House passed a bill called the HEROES Act which is not expected to be passed by the Senate due to its $3 trillion price tag and a laundry list of non-essential items. However, the HEROES Act does include a $1,200 stimulus check for qualifying individuals, and $1,200 for up to three dependents, for a maximum of $6,000 per family. The income eligibility limits are similar to those found in the CARES Act and apply to those with an AGI of $75,000 or less ($150,000 for married couples).

The bill the Senate is expected to propose next week is widely expected to reduce both the size and scope of the next stimulus checks, perhaps to less than $1,200 per person and at income levels as low as $40,000.

If these numbers are correct, or even in the right neighborhood, then millions of people who received the first stimulus check may not be eligible for the next one. 

But it’s not all doom and gloom. Here are 3 more ways you may benefit from the next stimulus bill, even if you don’t receive a stimulus check.

Payroll Tax Cuts Would Put Several Thousand Dollars Back In Your Pocket

President Trump and several of his economic advisors have gone on record stating they want payroll tax waivers to be included in the next stimulus bill. 

In addition to paying federal income tax, employees also pay two separate FICA taxes, which are commonly referred to as payroll taxes. FICA taxes, which stands for the  Federal Insurance Contributions Act, are used to pay for federal benefits programs, including Social Security Benefits and Medicare.

The FICA Social Security Tax is assessed at 6.2% of your income, up to the Social Security Wage Base of $137,700. You do not pay any additional taxes for income above that limit.

The FICA Medicare Tax is assessed at 1.45% of your income for income below $200,000. For income above $200,000, you would pay 1.45% plus an additional 0.9% tax called the “Additional Medicare Tax.” 

Combined, these two taxes account for 7.65% of your income. For example, someone who earned $100,000 would pay the following FICA Taxes:

• $6,200 Social Security Tax
• $1,450 Medicare Tax
• $7,650 total

Employers also pay the same amount of FICA Taxes on behalf of the employee. So if you are self-employed, you end up paying both the employee and the employer portion of the FICA taxes, for a total of 15.3% of your income.

Likelihood of Being Included in the Next Stimulus Bill:

President Trump is a big supporter of payroll tax waivers. There is also support from Larry Kudlow, the National Economic Council chief, and some members of the Senate. However, this is not a priority for the Democratic Party, which controls the house. This has a chance to be included in the next bill, provided the next bill includes provisions that directly impact more people, such as another stimulus check and expanded unemployment benefits (see next section).

Impact of a Payroll tax Waiver:

A payroll tax waiver could have the same impact as an immediate 7.65% pay raise, up to the Social Security wage base. Of course, the exact benefit will depend on your income. It’s also important to consider how this impacts businesses and those who are self-employed. A payroll tax could help businesses save money and potentially hire more workers. And the impact on those who are self employed would be the greatest since they pay both the employee and the employer portions of FICA taxes.

Expanded Unemployment Benefits

Over 50 million workers have filed for first-time unemployment benefits since March. While many people have returned to work, there are still millions of people who are unemployed. There is a $600 weekly federal unemployment benefit, in addition to state unemployment benefits, that is set to expire at the end of July. 

The HEROES Act includes a provision that would extend the federal unemployment benefit in its current form. However, many Republicans see this as a non-starter due to the cost and the fact that some workers are making more money from unemployment benefits than they made while working.

There is support for extending unemployment benefits, but they would more likely be smaller, perhaps in the $200 – $400 per week range. The Senates goal is to provide financial support, but not in an excessive way that may work as a disincentive to return to work.

Likelihood of Being Included in the Next Stimulus Bill:

Expanded unemployment benefits are a priority for the Democratic Party, which controls the House, so including expanded unemployment benefits will go a long way toward passing the next bill. 

Impact of Expanded Unemployment Benefits:

The impact would be substantial. Tens of millions of workers are still unemployed and many states are rolling back their reopening measures. This would be a valuable lifeline for millions of people..

Back to Work Bonuses

Offering workers a weekly “Back to Work Bonus” has been seen by some members of Congress as a way to encourage people to stop taking unemployment benefits and return to work. This Back to Work Bonus would be paid for a limited time and would be paid in addition to the worker’s wages.

Likelihood of Being Included in the Next Stimulus Bill:

This proposal has gained a lot of attention, but it’s uncertain how likely this will be included in the next stimulus bill. Opponents of this proposal may simply argue that this doesn’t solve the problem of unemployment and may have a significant impact—many unemployed workers want to return to work, but the jobs aren’t available right now.

Impact of Back to Work Bonus:

A Back to Work Bonus would impact unemployed workers who are fortunate enough to return to work. This would provide them with a short term bonus on top of their wages, hopefully allowing them to use the extra cash to get current on any outstanding bills, or set aside some money for future emergencies. 

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