Daily Stimulus Update: Stimulus Checks Could Be Smaller for Families Making More Than $150,000

by Angelica Leicht | Updated July 25, 2021 - First published on Feb. 1, 2021

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A stimulus check.

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Hoping for a third round of stimulus checks? Lawmakers are currently discussing a new COVID relief package, but the direct payments may not be what you expect.

As President Joe Biden works to push forward on the promise of a third round of stimulus checks, it appears that there could be room for negotiation regarding who receives the upcoming payments.

The president, who has proposed a $1.9 trillion COVID-19 relief package that includes $1,400 direct payment checks, is now reportedly open to scaling down stimulus checks for families making more than $150,000 per year, according to reports.

If this happens, families making over $150,000 could end up receiving significantly scaled-down checks for the third stimulus payment. Here’s what's being discussed.

Sunday's stimulus counterproposal

Nothing is set in stone yet regarding the possible $1,400 direct payments, as negotiations over the proposed stimulus relief package are still in the early stages.

However, a $600 billion counterproposal was announced by a handful of Republican senators Sunday in response to the $1.9 trillion package proposed by Biden. This proposed package includes three important factors that would effectively trim back the stimulus check formula and make it so that fewer people qualify for the third check.

In addition to funds for vaccine development and distribution, the proposed package includes a new round of "targeted" stimulus checks, which would be direct payments targeted for "families who need assistance the most."

Stimulus payments currently have an income cutoff of $75,000 per adult or $150,000 per household before phasing out.

A White House official spoke to CNN about the possible scaled-down payments, stating that while Biden is not open to some parts of the counterproposal, he is open to considering scaling down stimulus checks for families making more than $150,000 per year.

What that means is families who make more than $150,000 per year could end up receiving a smaller stimulus payment to their bank accounts from the third round of direct payments.

The White House issued a response to the package Sunday evening, stating that Biden has invited the GOP senators behind the counter proposal to the White House, "for a full exchange of views."

"With the virus posing a grave threat to the country, and economic conditions grim for so many, the need for action is urgent, and the scale of what must be done is large," White House press secretary Jen Psaki said.

Biden has also addressed the proposed stimulus payments during a Zoom meeting with lawmakers on Sunday, stating that "there's legitimate reason for people to say, 'Do you have the lines drawn the exact right way? Should it go to anybody making over X-number of dollars or Y?' I'm open to negotiate those things."

How targeted payments could work

While it seems unlikely that this new Republican counterproposal will pass, both the White House statement and Biden's own statements seem to indicate that the president is open to the idea of scaled-down payments for anyone making over $150,000.

According to the current formula for stimulus payments qualification, a single taxpayer must have an adjusted gross income of $75,000 per year or less and two-adult households must make under $150,000 to receive the full payment.

Anyone making over that amount is either eligible to receive a lesser payment or simply does not qualify. Most people, however, are eligible for some form of payment under the current formula.

If there are changes made to the formula, it could mean:

  • A lower maximum check to those making over $150,000
  • A lower qualifying income limit; this could be dropped to $50,000 from $75,000 to receive the full payment
  • A change the stimulus check formula to reduce the number of people who would get a partial payment

Whatever approach, one thing remains the same: if changes are made, it will be likely to affect higher-income households.

Where do negotiations go from here?

It is very early in the process of negotiating any potential stimulus packages. As of Monday morning, there had been no decisions about next steps for either proposed package. There will likely be more changes to any relief package proposed on either side.

We won't know where any relief packages or stimulus payments are headed until negotiations are in full play. Given the urgency of the issue, it's likely that we will see some movement on negotiations in the near future, but whether or not lawmakers will come to an agreement that cuts down on payments to higher-income households remains to be seen.

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