Stimulus Update: Lawmakers Push for More Direct Payments to Americans as Gas Prices Continue to Soar

A young adult pumps gas with a concerned expression on their face.

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Struggling to pay for the high price of gas and other consumer goods? If passed, these recently proposed bills would help by providing monthly payments to Americans who qualify.

Key points

  • Inflation rates and the Russian-Ukrainian war have had a significant impact on the cost of gas at the pump.
  • Americans' budgets were already stretched thin after lawmakers allowed the enhanced Child Tax Credit to expire in 2021.
  • To help curb the cost of fuel, lawmakers are now pushing to pass two gas stimulus bills that would provide direct payments to qualifying Americans in 2022.

The rising rate of inflation has taken a significant toll on Americans over the last several months. One of the main issues stemming from inflation is that paychecks don't stretch nearly as far as they should right now. This is due to inflation impacting the costs of everything from groceries to a gallon of gasoline -- which reached an all-time high this past March when it hit $4.33 per gallon.

That alone has put some serious pressure on the money in Americans' bank accounts. And while last year's enhanced Child Tax Credit payments helped millions of low- to moderate-income households make ends meet, there aren't any more monthly tax credit payments on the horizon right now. Lawmakers allowed the enhanced benefits to come to an end in 2021 after they were unable to reach an agreement on an extension.

But the good news is that there may be another type of financial help on the way in the near future. Congressional lawmakers recently introduced a couple of bills that are meant to help alleviate the pain from high gasoline costs -- The Gas Rebate Act and the Stop Gas Price Gouging Tax and Rebate Act -- and both include direct payments to Americans. Here's what each bill is, what it could be worth to your wallet, and who would qualify for the payments should these bills eventually be signed into law.

What to know about the Gas Rebate Act

What it is: The Gas Rebate Act was proposed by Congressman Mike Thompson, John Larson, and Lauren Underwood earlier this year as a way to address the high gas prices that Americans are facing at the pump. If passed, the Act would help Americans to better afford the high gas prices at the pump by providing them with a monthly energy rebate.

Similar to the direct payments that were issued as part of the enhanced Child Tax Credit, the energy rebate would be sent out each month to qualifying Americans.

What it could be worth: This monthly energy rebate would be worth $100 per qualifying adult. Households that qualify would also be eligible to receive another $100 per month for each dependent. The direct payments from this Act would continue monthly throughout 2022, provided that the national average gas prices remain above $4 per gallon.

Who would qualify: As noted, the price requirement included in this proposal would limit the payments to only the months in which gas prices are $4 per gallon or more on average. If prices drop below $4 per gallon on average for the month, the payments would not be issued for that particular month.

In addition to the price requirement, there would also be an income requirement to qualify. In order to take advantage of this proposed gas rebate, you would need to make under $75,000 per year as a single filer. If you are married and file jointly, you would need to make under $150,000 per year to receive the full monthly payment.

If passed, you may be able to claim some of the direct payment benefits if your annual income is slightly above the $75,000 maximum. However, payments would phase out completely at $80,000 for single filers and $160,000 for those who are married and file jointly.

What to know about the Stop Gas Price Gouging Tax and Rebate Act

What it is: The Stop Gas Price Gouging Tax and Rebate Act was introduced by Congressman Peter DeFazio back in March as a way to help Americans better afford the price of gas. The goal of this Act is to implement "a windfall profit tax on excessive corporate profits and return the revenue to American consumers in the form of a tax rebate."

The idea behind this Act is that many of the major oil companies are taking advantage of the impact that the Russian invasion of Ukraine is having on the market -- which has resulted in higher gas prices. In turn, the bill proposes that the major gas companies should be taxed at a much higher rate in 2022 when their profits exceed 110% of the average profits from the year prior.

When the major oil profits reach the tipping point laid out in the bill, the companies would then be taxed at a rate of 50%. These funds, which would be collected by the IRS, would then be redistributed to Americans as a tax rebate the following year.

What it could be worth: It's impossible to determine how much Americans would receive from the tax rate hike on big oil companies. The tax rebates would be directly tied to the amount of revenue collected from the higher tax, and profits would need to climb higher than 110% in order for the higher tax rate to be implemented.

But while the potential tax rebate amount is unclear, what is clear is that Americans would not have to wait until tax season to collect the money. According to the bill, the revenue raised by the windfall profit tax would be returned to Americans as a monthly, advanced, and refundable tax credit, similar to the monthly Child Tax Credit payments that were issued in 2021.

Who would qualify: As with most of the other stimulus programs, this tax rebate would be phased out by income. According to the bill, eligibility for the tax rebate would be identical to the eligibility restrictions for the economic impact payments that were included in the American Rescue Plan.

What's next for these two bills?

At this point, the future of either bill is uncertain. Both proposals are in the very early phases, and both are likely to meet significant hurdles as they make their way through the proper channels. Whether or not they can make it past these challenges to be signed into law remains to be seen.

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