Summary: The Senate is currently negotiating its own version of the House-passed American Rescue Plan Act of 2021, a COVID-19 relief bill that includes direct payments (“recovery rebates”) to families. Reports indicate that the Senate version of the rebates will phase out more quickly than the House-passed version. The rebate value is set to $1,400 per person (including dependents), phasing out over an income range of $75,000 to $80,000 for single filers ($112,500 to $120,000 for head of household filers and $150,000 to $160,000 for married filers). PWBM projects that this provision would cost $416 billion, with 90 percent of families receiving a payment.

Table 1: Distribution of Federal Tax Change under the Proposal

Income group	Average benefit	Share with a benefit	Average benefit for those with a benefit	Percent change in after-tax income	Share of benefit	Share of federal taxes paid (before tax change)	Share of federal taxes paid (after tax change)
Bottom quintile	$1,920	100%	$1,920	40%	23%	0%	-4%
Second quintile	$2,595	100%	$2,595	10%	23%	3%	0%
Middle quintile	$2,685	100%	$2,685	6%	23%	11%	9%
Fourth quintile	$2,875	86%	$3,355	4%	21%	19%	19%
80-90%	$2,785	70%	$3,990	2%	8%	15%	16%
90-95%	$740	19%	$3,830	0%	1%	11%	13%
95-99%	$260	6%	$4,220	0%	0%	16%	19%
99-99.9%	$0	0%	$0	0%	0%	13%	15%
Top 0.1%	$0	0%	$0	0%	0%	12%	14%

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.