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.