PWBM's understanding of the bill's legislative language regarding advance payments has been updated since this estimate was published. Please see our updated estimate.
Summary: The Coronavirus Aid, Relief and Economic Security (CARES) Act would provide families with emergency “recovery rebates”. The bill would provide individuals with an advance refundable credit worth $1,200 ($2,400 for married couples) plus $500 for qualifying dependent children. These payments would begin to phase out starting at $75,000 in AGI ($150,000 for married couples and $112,500 for heads of household). PWBM projects that the rebates would cost $272 billion. (Note: this estimate was updated on 3/27/20 to correct a small modeling error.)

Table 1: Distribution of Federal Tax Change Under The CARES Act

Income group Average benefit Share receiving rebate Percent change in after-tax income Share of benefit Share of federal taxes paid
Under current law Under the proposal
Bottom quintile $1,385 100.0% 46.2% 25.5% 0.1% -2.4%
Second quintile $1,665 100.0% 7.3% 23.5% 2.4% 0.2%
Middle quintile $1,765 100.0% 4.1% 24.0% 10.3% 9.0%
Fourth quintile $1,910 92.3% 2.5% 22.5% 19.1% 18.8%
80-90% $955 67.7% 0.8% 4.6% 15.0% 15.9%
90-95% $10 2.5% 0.2% 0.0% 10.9% 12.0%
95-99% $0 0.0% 0.0% 0.0% 16.3% 17.9%
99-99.9% $0 0.0% 0.0% 0.0% 12.8% 14.0%
Top 0.1% $0 0.0% 0.0% 0.0% 13.0% 14.3%

Note: “Income” is defined as AGI plus: above-the-line deductions, nontaxable interest income, nontaxable Social Security benefits, nontaxable pensions and annuities, employer-side payroll taxes, and corporate liability. Note that this definition excludes transfer income and thus understates low-income tax units' income.