As discussions in Washington continue, we’re starting to get a better picture of where the possible new income threshold will be for the next round of stimulus checks.
Treasury Secretary Janet Yellen said that she believed the individual threshold (for the full stimulus payment) should be at $60,000 per year.
“If you think about an elementary school teacher or a policeman making $60,000 a year and faced with children who are out of school and people who may have had to withdraw from the labor force in order to take care of them and many extra burdens, [Biden] thinks, and I would certainly agree, that it’s appropriate for people there to get support,” said Yellen.
This is $10,000 higher than the amount previously proposed by Democratic senators like Joe Manchin.
But this amount is also $15,000 lower than what some other Democrats like Bernie Sanders have voiced support for. Those lawmakers would prefer for anyone making $75,000 or less to receive the full stimulus amount.
But it doesn’t sound like the White House is thinking along those lines.
Yellen expressed that she was not willing to commit to $75,000 and stressed that the White House is working with Congress to find a good structure for the phased out payments
“I think the details can be worked out. And the president is certainly willing to work with Congress to find a good structure for these payments.”
So now it is looking more like the cut off for full payments will be somewhere around the $50,000-$60,000 range.
It sounds like they are doing a lot of thinking over how the payments could phased out so we might see a different type of phase out structure with the next round of payments.
According to Democratic leaders, they still expect the package to pass within two weeks so it is only a matter of time before we hear hard details on these limits.
While we have had confirmation from the president that $1,400 checks will be going out, Congress is still deciding on the potential new income threshold for the next round of stimulus relief.
It seems that they are pretty committed to making adjustments to the income thresholds but they just have not settled on a number.
“I think that’s what most people have raised the issue on, both in the Senate and in the House. I, frankly, think that that is correct,” House Majority Leader Steny Hoyer said.
“I don’t want to speculate on the figure or a figure, but I think that may well be under consideration for adjustment from the one that was passed in December.”
While we have not heard official specifics, one senator has offered an amendment to tighten up eligibility.
Senator Joe Manchin has proposed a new change that would limit eligibility so that no individual making above $75,000 per year gets a payment and no couple making above $150,000 per year gets a payment.
With this proposal, individuals making up to $50,000 per year would receive the full payment and the full payment cut off for a couples would be $100,000.
This seems like one of the most likely outcomes.
It strikes a bit of a perfect middle ground between the GOP proposal that had the hard cut off at $50,000 per year for individuals and the prior policy that offered the full payment to those making under $75,000 per year.
The problem with the prior eligibility requirements was that payments went out to wealthy Americans and a lot of lawmakers took issue with that.
“I happen to agree that the Mnuchin [not Manchin] formula on the cash payments should be revisited. The outcome of that Mnuchin formula was indefensible. … So yes, I would be open to that,” Senator Dick Durbin said.
There may be some tweaks that occur to this proposal but I would anticipate the income requirements to be very close to this proposed amendment.
Up until this point, we’ve heard that the Biden administration and many Democrats would prefer to have $1,400 checks. But we had not heard a hard “yes” on the $1,400 figure.
In fact, things were getting called into question when Republicans unveiled their proposal which included $1,000 stimulus checks.
However, now we know that Biden is committed to issuing out more $1,400 checks because as he stated, “That’s what the American people were promised.”
“I’m not cutting the size of the checks,” Biden said. “They’re going to be $1,400. Period.
I had a feeling that Biden would not back down from the $1,400 amount considering the backlash that he already received for not issuing an additional $2,000.
But now it’s great to have confirmation about the amount.
The big question now remains what type of targeting measures will be put in place?
We’ve heard that cut offs could range anywhere from $40,000 to $75,000 but we still don’t know exactly where the income threshold will fall.
Hopefully, by the end of this week we will have a better idea.
The big issue with the stimulus checks right now is whether or not they should be more targeted than the prior rounds. In addition, assuming lawmakers agree to a more targeted approach, the secondary question is just how targeted they should be.
It looks like the Senate is starting to come to agreement when it comes to the targeted nature of the third stimulus check.
Yesterday, they voted 99 to 1 on an amendment proposed by Senators Joe Manchin and Susan Collins to bar “upper-income taxpayers” from eligibility for the stimulus payments.
“The question before us is quite simple. Do we want stimulus checks to go to households with family incomes of $300,000… or do we want to target the assistance to struggling families who need the help and provide a boost for the economy?” Collins said.
This is a great sign for Congress and I don’t believe the limitations are controversial to any lawmakers.
“I don’t think a single person on this floor would disagree to target the relief to our neighbors who are struggling,” Manchin said.
“There are other families who have not missed a single paycheck as a result of this pandemic. It does not make sense to send a check to those individuals.”
Simply put, the vast majority of families making over 300 grand are not going to be in a position to where they need stimulus relief.
But what is still left open is how low the income threshold will be for the next round of checks which should remain at $1,400 based on reports.
One proposal by Democrats would include lowering the threshold so that payments begin to phase out at $50,000, $75,000 for people who file as the heads of households, and $100,000 for married couples.
$50,000 is the income threshold that the GOP proposed to be the hard cut off for stimulus relief. And $50,000 is also $25,000 under the prior threshold for when payments began to phase out.
So that seems like a pretty reasonable threshold although I wonder how high that income threshold would go up before payments are completely phased out.
Some lawmakers like Bernie Sanders want to ensure that people making $75,000 or less receive their full payments.
“I do not oppose this amendment. I do not think anybody here wants to see people who make $300,000 get direct payments,” he said.
“Let’s make certain that people who are making $75,000 per year or less do get their payments and couples making $150,000 or less do get their payments.”
So it seems like the cut off for receiving a full stimulus payment this third round will likely fall somewhere between $50,000 and $75,000 a year in income.
(It doesn’t seem like Democrats will get on board with the lower income thresholds proposed by the GOP.)
We will see how things play out but I have a feeling that we might have a more specific idea on how these income thresholds will work come next week.
UponArriving has partnered with CardRatings for our coverage of credit card products. UponArriving and CardRatings may receive a commission from card issuers. Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.
Daniel Gillaspia is the Founder of UponArriving.com and creator of the credit card app, WalletFlo. He is a former attorney turned full-time credit card rewards/travel expert and has earned and redeemed millions of miles to travel the globe. Since 2014, his content has been featured in major publications such as National Geographic, Smithsonian Magazine, Forbes, CNBC, US News, and Business Insider. Find his full bio here.