The Potential Poverty Reduction Effect of the American Rescue Plan

This fact sheet provides an analysis of the poverty reduction effects of a set of policy elements  in the American Rescue Plan Act of 2021, legislation to provide economic relief amidst the ongoing COVID-19 crisis. It projects annual poverty rates for 2021 for the US population as a whole and across age and racial and ethnic groups.

We find that a relief package containing enhanced Supplemental Nutrition Assistance Program (SNAP) benefits, unemployment benefits, family and child care tax credits, as well as direct cash payments could cut child poverty by more than half in 2021.

Note: This brief was updated on March 11, 2021 to reflect the final elements included in H.R.1319-American Rescue Plan Act of 2021, as well as to account for small adjustments in our simulation model. The original brief was released on January 14, 2021 and a previous update on February 25, 2021.