Every way your $1,400 stimulus check could be “targeted” and what that means

That $1,400 stimulus check you keep hearing about may not actually be a $1,400 stimulus check for everyone. As with the first two checks, it would most likely operate on a sliding scale, with some people getting the full amount depending on their yearly earnings and others getting less, or perhaps none. This time around, the total amount a stimulus check could bring may be higher, but if the latest reported proposal becomes law, it also means fewer people would get a check overall.

The thrust for a “targeted” stimulus check has everything to do with a fairly complex formula written into the first two stimulus bills, one that determines how much money your household would get, based on a bunch of different factors, including the usual qualifications, your yearly income, how many dependents you have and things you can’t control, like something called the “reduction rate,” as well as arbitrary income limits.

While over 160 million stimulus checks ($1,200) were sent the first time around, fewer people could actually be eligible for a $1,400 third payment overall, even though the people who hit that target may stand to get a larger check than the first two rounds. Meanwhile, President Joe Biden also has also proposed new qualifications that could allow millions to either receive a stimulus check for the first time or get more money per household.) We explain what the objection is to a $1,400 stimulus check and how it could potentially become more targeted. We continue to update this story with new information.

How Congress could target the next stimulus check

Earlier this week, a group of 10 moderate Republicans proposed a $600 billion GOP plan with a $1,000 check. While Biden has rejected that, some of its ideas could affect a third payment, as reported by The Washington Post. Below, we’ll go over exactly why lawmakers would potentially want to target the next payment and how each change would work on its own.

• Supply a lower check maximum than $1,400 (this works on two levels). Note that Biden seems set on the $1,400 amount.
• Lower the qualifying income limit for the full stimulus check amount from $75,000 per individual and $150,000 per married couple.
• Enforce a cutoff to the upper limit for receiving a payment (dependents add another dimension).
• Change the “reduction rate” in the stimulus check formula to reduce the number of people who would get a partial payment.

Why some want a more ‘targeted’ stimulus check to begin with

If the $1,400-per-person stimulus check follows the exact same formula as the first two payments, people who are considered high income would get all or part of the maximum payment, in addition to tens of millions of people who fit the sweet spot that Congress actively wants to supply with stimulus money. 

For the first two checks, that was defined as single taxpayers with an adjusted gross income of $75,000 per year or less (and their equivalent for heads of household and married couples). A new Democratic view could adjust that so people who earn under $50,000 a year as a single taxpayer or $100,000 per year as a married couple would get the full $1,400 (so long as they don’t have kids — here’s how to calculate based on your family situation.)

But without limiting who else would get the payment, the way stimulus checks have been calculated so far, raising the maximum to $1,400 could authorize checks to people who make “too much money.” The formula that’s currently in use was written into the respective stimulus bills in a way that provides a partial payment to people who make more than the $75,000 per year threshold, up to a certain upper cap. 

Looking at the formula for the $1,200, $600 and proposed $1,400 checks, it’s immediately clear how raising or lowering the per-person maximum — e.g. $1,400 versus $600 — can change the total number of people over the $75,000 income limit who could be eligible for a payment.

For example, using our $1,400 stimulus calculator, a single taxpayer with an AGI below $75,000 would receive the full $1,400 check. At $85,000, this person could receive $1,150; at $90,000 a year, they could get $650; and if they make $102,900, the Treasury would send a stimulus check for $5.

In contrast, a $600 stimulus maximum allots a single taxpayer with an AGI of $80,000 a stimulus check for $350. The same person who makes $86,900 a year would get only a $5 check.

The result is that, with Biden’s current formula, more people are eligible overall to receive a stimulus check of some amount, even if it’s a relatively small payment. Dependents and spouses add another layer — here’s more information, including a handy comparison chart.

Lowering the per-person maximum could result in fewer payments overall

Let’s say for the sake of argument that the $600 billion GOP proposal were adopted and a $1,000 stimulus check instead of $1,400 were sent. Even if no other changes were made to the formula or to the income limit, lowering the amount would automatically disqualify more people simply because of the way the math works out.

For example, the drop from the first $1,200 stimulus payment to the $600 second stimulus check immediately disqualified people who had otherwise qualified for the first stimulus check. Simply using a $600 base instead of $1,200 reduced the cutoff point for receiving a partial payment. 

Said another way, the smaller the per-person maximum, the sooner people who made more than $75,000 a year hit the limit for receiving any money.

With the first check, a single taxpayer — remember, no spouse or kids — could get some amount of stimulus money if they made under $99,000. With the second check, that vanishing point dropped to $87,000. The only difference in that part of the equation was the maximum per-person payment. (Separately, child dependents counted for $600 in the second check instead of $500.)

As another illustration of the effects of the base payment, the first stimulus check went out to around 160 million people, while the second payment reached an estimated 147 million households, despite more groups of people qualifying for the second check. Likewise, a $1,000 payment would reach fewer people than a $1,400 stimulus check even if that were the sole change to Biden’s proposal.

The new check could exclude earners over a set income

The GOP proposal illustrates this concept well. It seeks to exclude single taxpayers who make more than $50,000 per person and couples making $100,000 from receiving a stimulus check — full stop. People with an AGI under $40,000 and families earning under $80,000 would receive the full amount, and everyone in between would get something, but less than $1,000. 

Dependents of any age would count toward the $500, which does complicate the issue, but the thrust behind the GOP’s argument is to keep people who make more than the “desired” or “targeted” salary from receiving stimulus money.

It could limit the number of people receiving the full amount

One way to send a check to fewer people would be instituting a firm cutoff. For example, you can’t get a check if you make more than a certain amount of money per year, period. Another, related but different option, is to lower the number of people who get the full check amount. One proposal embraced by some Democrats, according to The Washington Post, would begin phasing out recipients who make $50,000 a year or more. 

Say you have a $1,400 check, and people who make under $50,000 are the only ones who would receive the full amount. People with an AGI over that amount would receive a partial payment (up to a certain point) — which would also peter out quicker for people with relatively higher incomes. That calculation would keep the highest earners from receiving a stimulus check for any quantity.

More people would get a partial check than with the $600 billion package proposal, but far fewer would receive stimulus money than with a phase-out starting at $75,000 a year.

What happens if the stimulus calculation changes?

Changing the math in the stimulus check formula used for the first two checks would be one way to limit the number of people who receive a check, and a method that the GOP pitch proposed, in addition to other measures. Let’s just look at this one on its own — for the sake of argument, let’s assume that the final bill would keep the $1,400 maximum and the income threshold at $75,000. 

Adjusting the part of the formula that controls partial payments could result in people who make over $75,000 per year hitting the vanishing point to get some amount of stimulus money, even with a $1,400 maximum payment, resulting in fewer checks going out overall.

For example, with the current formula, a $1,400 check would give a person with an AGI of $80,000 a year a $1,150 stimulus check. The GOP bill suggests an adjustment to the formula that would reduce your share by 10% instead of 5% for every $1,000 in income. 

Therefore, the more you earn, the less money you could receive, at a higher rate than the current formula. That would effectively mean that people who are relatively high earners would get a much smaller check or none at all.

How do new qualifying groups factor in?

In addition to supporting larger stimulus checks, Biden also wants to include two previously excluded groups: dependents of any age (not just children under 17) and all families with mixed-status citizenship. Combined, that could potentially extend stimulus funds to nearly 20 million people who previously might not have been counted toward the family total. The $600 billion GOP proposal would allot $500 to dependents of any age.

If passed, the outcome would most likely be a larger stimulus check for families that previously qualified (in the case of 17-year-olds and older adult dependents), and some mixed-status families qualifying for a new check for the first time. In all cases, families would have to meet all other eligibility requirements — like an income limit — to receive a future stimulus check.

Until negotiations begin in earnest, we’ll have to see how the stimulus bill and third stimulus check develop. For more information, here’s the current timeline for a third stimulus check and here’s what to know about stimulus check qualifications. Here’s what to do if you’re missing all or part of your stimulus check.