Under the pending deal, confirmed by CBS News, the $1,400 direct payments would begin to phase out at $75,000 for individuals, but would cut off eligibility for single people earning more than $80,000. For couples who file jointly, the phase-out will begin for those making $150,000 and end at $160,000.
The income phaseouts would likely cut off millions of households who qualified for the previous two rounds of stimulus checks because of their higher income limits. For instance, the first round of stimulus payments paid $1,200 to single people earning $75,000 or less, but phased out the payments until they cut off entirely for single taxpayers with incomes over $99,000 — or $19,000 higher than the new agreement.
The IRS said it sent 30 million payments to households earning more than $75,000 during the first round of stimulus checks. Under the new lower income cut-off, it's likely many of those households wouldn't qualify for the full $1,400 check.
Some lawmakers have argued for stricter eligibility for the third round of stimulus checks given economic data indicating many middle- and upper-income households are regaining their economic footing. But it's not likely to be a popular move with taxpayers, given that a new poll from Monmouth found a majority of respondents favorably view the $1,400 checks and see the money as off-limits from congressional efforts to reduce the payout.
"I hear, 'Let's get money to those who need it,' but there is no one in D.C. who could identify those families," said Claudia Sahm, an economist who has worked at the Federal Reserve and the Washington Center for Equitable Growth. "We're still in a place where everything is going to help."
Hardship remains widespread, although lower-income families have been more likely to experience income and job losses due to the pandemic. More than 1 in 3 adults said they had difficulties paying their bills in the last week of January, and more than 4 in 10 adults who live with children said the same thing, an analysis from the Center on Budget and Policy and Priorities.
Limiting upper-income households has drawn bipartisan support, with Democratic Senator Joe Manchin of West Virginia and Republican Senator Susan Collins of Maine working to block "upper income citizens" from the next round of stimulus checks. Notably, however, their plan didn't define "upper income." The measure would ensure that "the struggling families that need it most" would receive the checks, Collins had said.
The new agreement would decrease the number of Americans who would have been eligible for payments under the version of the bill passed by the House on Saturday. The House bill also phased out payments for individuals making more than $75,000 and couples making more than $150,000, but payments were capped at incomes of $100,000 and $200,000, respectively.
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