Biden's Relief Fund To Slash Taxes For Americans In Lower and Mid-income Families

As plans to increase capital gains tax for Americans earning more than $1 million are put in place, a government report reveals that Biden's $1.9 trillion relief fund has cut taxes for Americans in lower and mid-income families this year. 

Due to the provisions in the American Rescue Plan which President Joe Biden signed into law last month, American taxpayers earning below $75,000 in a year will not have to pay any tax on average this year. It is expected that the lower-income taxpayers receive relief funds, which will depend on their financial strength. Those with incomes ranging between $75,000 and $100,000 annually will pay an average tax rate of only about $1.8 percent, according to the Joint Committee on Taxation.

These tax breaks are, however, temporary. They're tax-break reliefs meant to last a year or two, at most.

A big part of this tax slash for low and moderate-income earners stems from the stimulus payments in the rescue package endorsed in May but Democrats. Over 160 million American families are eligible for these payments, which can reach $1400 per individual. The full amount is to go to people who earn less than $75,000 and couples who earn less than $150,000 combined. However, the payments are slowly taken out as these individuals' income increases until it's finally cut off when it reaches $80,000 a year of $160,000 combined for couples.

Another benefit for lower and mid-income Americans is the one-year expansion of the child tax credit which is included in the relief law. This means that families with children under ages 6 and 17 are expected to receive $3,000 annually for each child, which is an increase from the previous maximum amount of $2,000. 

This simultaneously works to also increase the earned income credit for American workers without children by increasing their maximum credit and extending eligibility to even more people, making it the largest expansion to the earned income tax credit in about 12 years.

There has been speculation that President Biden's call for future tax upgrade for wealthy Americans, which includes the increase in capital gains tax, might not pass Congress. Even if it does, there have been arguments that these taxes are avoidable, and might push Americans to holding their investments till death, as that will ensure a tax-free passing to the heirs.