COVID-19 Relief: Stimulus, PPP Loans, and Tax Credits

The federal government’s response to the pandemic ran through three major laws passed between March 2020 and March 2021: the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the Consolidated Appropriations Act of December 2020, and the American Rescue Plan Act of March 2021.¹ Together, the COVID-19 relief programs they created sent stimulus checks to households, expanded unemployment benefits, funded forgivable small business loans, paused student loan payments, and helped renters and homeowners stay housed. Most of those programs have closed. A few still shape people’s finances in 2026, and one program is still accepting applications in some states.

What Still Affects You in 2026

Several relief programs continue to matter, either because payments are ongoing, the IRS is still reviewing claims, or a limited window remains open.

COVID-19 EIDL borrowers are repaying 30-year loans. Falling behind can trigger SBA collection actions, including Treasury offset of tax refunds.
The Homeowner Assistance Fund is scheduled to run through September 2026 or until state funds are exhausted, whichever comes first. Many state programs have already depleted their allocations.²
The IRS continues to review Employee Retention Credit claims. Businesses that received the credit improperly face repayment with penalties and interest.³
Federal student loan borrowers are back on regular repayment schedules. Interest resumed accruing on September 1, 2023, and payments came due in October 2023.
The deadlines to claim missed stimulus payments have passed. The 2020 Recovery Rebate Credit window closed on May 17, 2024, and the 2021 credit deadline was April 15, 2025, with no extensions available.

Direct Stimulus Payments

Congress authorized three rounds of Economic Impact Payments between April 2020 and March 2021. The IRS used adjusted gross income from recent tax returns to determine eligibility and paid most recipients by direct deposit.

First Round: April 2020

The CARES Act paid $1,200 per eligible adult ($2,400 for married couples filing jointly) plus $500 for each qualifying child under 17.⁴ Single filers with adjusted gross income below $75,000 received the full amount, with the thresholds set at $112,500 for heads of household and $150,000 for joint filers. Above those limits, the payment shrank by $5 for every $100 of additional income.⁵

Second Round: January 2021

The Consolidated Appropriations Act sent $600 per adult ($1,200 for joint filers) plus $600 per qualifying child.⁶ The same income thresholds and phase-out rates applied.

Third Round: March 2021

The American Rescue Plan paid $1,400 per person ($2,800 for joint filers) plus $1,400 for each dependent regardless of age. Phase-out began at the same thresholds as before, but payments zeroed out entirely at $80,000 for single filers, $120,000 for heads of household, and $160,000 for joint filers.⁷ Adult dependents and college students were eligible for the first time.

Anyone who missed a payment or received less than the full amount could claim the difference as a Recovery Rebate Credit on their federal return.⁸ Those windows are now closed. No hardship exceptions apply.

Expanded Unemployment Benefits

The CARES Act built two federal programs on top of the existing state systems. Pandemic Unemployment Assistance opened benefits to workers who normally do not qualify, including independent contractors, freelancers, and the self-employed.⁹ Applicants had to certify a specific pandemic-related reason for being unable to work, such as a COVID-19 diagnosis, caring for a sick family member, or a workplace closure.¹⁰

Federal Pandemic Unemployment Compensation added a flat weekly supplement on top of state benefits. That supplement was $600 per week through July 31, 2020, then returned at $300 per week from late December 2020 through September 6, 2021.¹¹ Both programs ended in September 2021.

Even though the money came from federal funds, claimants dealt with their state workforce agencies to apply and certify weekly. False statements on certifications could produce overpayment notices and fraud investigations, and states have continued pursuing overpayment recovery from claimants later found ineligible.

Paycheck Protection Program

The Paycheck Protection Program offered forgivable loans to small businesses and eligible nonprofits so they could keep employees on payroll. The SBA authorized private lenders to process applications and distribute federal funds under 15 U.S.C. § 636(a)(36).¹² Businesses with 500 or fewer employees generally qualified. Loan amounts equaled 2.5 times average monthly payroll costs.¹³

For full forgiveness, borrowers had to spend at least 60% of the loan on payroll costs like salaries and benefits, with the other 40% available for rent, mortgage interest, and utilities.¹⁴ After the covered period of 8 to 24 weeks, borrowers submitted forgiveness applications to their lenders, who reviewed the documentation and sent it to the SBA for final approval.¹⁵ The program closed to new applications on May 31, 2021. Forgiven PPP amounts are not counted as federal taxable income, and expenses paid with PPP funds remain deductible.

COVID-19 Economic Injury Disaster Loans

The SBA also offered COVID-19 Economic Injury Disaster Loans, and unlike PPP loans, EIDL loans are not forgivable. They carry a fixed interest rate of 3.75% for businesses and 2.75% for nonprofits over a 30-year repayment term.¹⁶ Funds were restricted to working capital and ordinary operating expenses.

The program also included EIDL Advances of up to $15,000 that functioned as grants and never had to be repaid.¹⁷ The loans themselves remain active. Payments were deferred for the first two years from origination, with interest accruing during that period. Most borrowers are now well into repayment, and the 30-year term stretches many obligations into the 2050s.

Employee Retention Credit

The Employee Retention Credit gave eligible employers a refundable tax credit for keeping workers on payroll. For 2020, the credit equaled 50% of qualified wages up to $10,000 per employee for the year, capping the benefit at $5,000 per employee. For 2021, Congress raised it to 70% of qualified wages up to $10,000 per employee per quarter, so the potential benefit reached $28,000 per employee across four quarters.¹⁸

To qualify, a business had to be fully or partly shut down by a government order or experience a significant decline in gross receipts compared with the same quarter in 2019. Employers claimed the credit on amended payroll tax returns. This is where the story gets complicated. Third-party promoters encouraged many businesses to file dubious claims, and the IRS is closely reviewing returns and pursuing improper ones. Any business that received the credit incorrectly faces repayment plus penalties and interest.³

Housing Help: Rent and Mortgages

The Consolidated Appropriations Act created the Emergency Rental Assistance Program with an initial $25 billion for tenants behind on rent and utilities.¹⁹ The American Rescue Plan added another $21.6 billion. State and local governments distributed the money, generally requiring applicants to show reduced income or financial hardship, a risk of eviction or housing instability, and household income at or below 80% of the area median income. Payments usually went directly to landlords or utility companies; when a landlord refused to participate, funds could go to the tenant.

Alongside the rental aid, the CDC issued a federal eviction moratorium that temporarily barred landlords from evicting tenants for nonpayment. It was extended several times before the Supreme Court struck it down on August 26, 2021, holding that the CDC had exceeded its statutory authority.²⁰

On the mortgage side, Section 4022 of the CARES Act gave borrowers with federally backed loans the right to pause payments for up to 180 days, with the option to extend for another 180 days. This covered loans backed by FHA, VA, USDA, Fannie Mae, and Freddie Mac. Borrowers only had to affirm a pandemic-related hardship, and servicers could not demand more documentation or charge late fees during forbearance.²¹

Forbearance did not erase the missed payments. Once it ended, borrowers needed a plan for the deferred amount. Options varied by loan type but commonly included placing the missed payments in a subordinate lien due at the end of the loan, modifying the loan terms to extend repayment, or adding the past-due balance to principal.²²

For homeowners still struggling, the Homeowner Assistance Fund provides grants for mortgage payments, property taxes, insurance, utilities, and certain home repairs. Funded by the American Rescue Plan, it runs through September 2026 or until state funds are exhausted. Eligibility generally requires a pandemic-related financial hardship after January 21, 2020, and household income at or below 150% of the area median income (or $79,900, whichever is higher). Approved funds go directly to servicers, utility companies, or contractors rather than to the homeowner.² Availability varies by state.

Federal Student Loan Forbearance

Section 3513 of the CARES Act suspended monthly payments on federal Direct Loans and Federal Family Education Loans held by the Department of Education and set interest to 0% during the suspension. The pause applied automatically.²³ Borrowers who kept paying saw every dollar go to principal because no interest accrued.

Private student loans and commercially held FFEL loans were not covered. Those borrowers kept accruing interest and remained on their regular payment schedules throughout the pandemic.

Both the Trump and Biden administrations extended the pause well beyond the original September 30, 2020 end date. Interest resumed on September 1, 2023, and payments came due in October 2023. The Department of Education added a 12-month on-ramp through September 2024 during which missed payments would not trigger default, collections, or negative credit reporting, but interest still accumulated. All federal student loan borrowers are back on regular repayment schedules in 2026. The pandemic-era forbearance months generally counted toward income-driven repayment forgiveness timelines for borrowers enrolled in qualifying plans.

The 2021 Child Tax Credit Expansion

The American Rescue Plan temporarily enlarged the Child Tax Credit for the 2021 tax year, raising the maximum from $2,000 per child to $3,600 for children under 6 and $3,000 for children ages 6 through 17. Seventeen-year-olds became eligible for the first time.²⁴ Instead of waiting until tax season, eligible families got half of the estimated amount in advance monthly payments from July through December 2021. The IRS sent those payments automatically based on 2020 return data.

Families reconciled the advance payments on their 2021 return. If income or the number of qualifying children changed, the final credit was smaller or a portion had to be paid back. The expanded credit reverted to $2,000 per child for 2022 and later years, and Congress has not renewed the higher amounts.

How Relief Money Is Taxed

Tax treatment varied significantly by program, and mistakes can produce an unexpected bill or a missed deduction.

Economic Impact Payments were structured as refundable tax credits, not income. They did not increase tax liability and did not need to be reported as income on any return.
Pandemic unemployment compensation was generally taxable as ordinary income. For 2020 only, the American Rescue Plan excluded the first $10,200 of unemployment compensation from federal taxable income for taxpayers with modified adjusted gross income below $150,000. That exclusion did not apply to 2021 or later.²⁵
Forgiven PPP loan amounts are excluded from federal gross income, and business expenses paid with those funds remain deductible. State treatment varied; most states eventually conformed to the federal approach.
Emergency rental assistance received by tenants is not counted as income. Landlords who received payments on a tenant’s behalf must include those amounts in gross income.²⁶
Grant-like EIDL Advances were excluded from federal gross income, similar to PPP forgiveness.

1
U.S. Department of the Treasury. About the CARES Act and the Consolidated Appropriations Act
2
Consumer Financial Protection Bureau. Get Homeowner Assistance Fund Help
3
Internal Revenue Service. Employee Retention Credit
4
GovInfo. Public Law 116-136 – Coronavirus Aid, Relief, and Economic Security Act
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Congressional Research Service. COVID-19 and Direct Payments to Individuals – Economic Impact Payments
6
Internal Revenue Service. 2020 Recovery Rebate Credit – Topic F: Finding the First and Second Economic Impact Payment Amounts
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Internal Revenue Service. 2021 Recovery Rebate Credit – Topic C: Eligibility for Claiming a Recovery Rebate Credit on a 2021 Tax Return
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Internal Revenue Service. 2021 Recovery Rebate Credit Questions and Answers
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U.S. Department of Labor. Pandemic Unemployment Assistance Fact Sheet
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U.S. Department of Labor. U.S. Department of Labor Publishes Guidance on Pandemic Unemployment Assistance
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Office of the Law Revision Counsel. 15 USC 9023 – Emergency Increase in Unemployment Compensation Benefits
12
Legal Information Institute. 15 USC 636 – Additional Powers
13
U.S. Department of the Treasury. How to Calculate Loan Amounts
14
Congressional Research Service. SBA Paycheck Protection Program Loan Forgiveness: In Brief
15
U.S. Small Business Administration. Paycheck Protection Program
16
U.S. Small Business Administration. About COVID-19 EIDL
17
U.S. Small Business Administration. About Targeted EIDL Advance and Supplemental Targeted Advance
18
U.S. Department of the Treasury. COVID-19 Business Support – Employee Retention Credit
19
U.S. Department of the Treasury. Emergency Rental Assistance Program
20
Supreme Court of the United States. Alabama Association of Realtors v. Department of Health and Human Services
21
Federal Reserve. Coronavirus Aid, Relief, and Economic Security Act – Examination Procedures
22
U.S. Department of Housing and Urban Development. FHA Loss Mitigation Program
23
Congress.gov. Public Law 116-136 – Coronavirus Aid, Relief, and Economic Security Act
24
U.S. Department of the Treasury. Child Tax Credit
25
Internal Revenue Service. 2020 Unemployment Compensation Exclusion FAQs – Topic A: Eligibility
26
Internal Revenue Service. Emergency Rental Assistance Frequently Asked Questions