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$2,000 stimulus check? Here’s how much cash could be on the way with a third payment

President-elect Joe Biden speaks about his economic agenda and cabinet
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Millions of Americans are already receiving their second coronavirus stimulus check — and they could soon be up for a third worth up to $2,000, after Democrats captured both seats in the Georgia Senate run-off elections.

The Senate is on its way to becoming a 50-50 chamber once Jon Ossoff and Raphael Warnock of Georgia are sworn in, with Vice President-elect Kamala Harris holding what’s bound to be a crucial tie-breaking vote. That balance of power makes the prospect of larger relief checks more realistic, after Senate Majority Leader Mitch McConnell back in December shot down President Donald Trump’s calls for $2,000 payments on the grounds that it had “no realistic path to quickly pass the Senate.”

But while President-elect Joe Biden has underscored that his main priority once taking office come Jan. 20 will be hustling to get more pandemic aid out to Americans, the way those checks will work is still up in the air. And in a 50-50 Senate split, just one vote could be the difference between receiving another stimulus check or not.

Here’s everything you need to know about the likelihood of extra stimulus money, including how much, who’s eligible and whether it should adjust your plans to file a Recovery Rebate Credit.

$2,000 or $1,400: What’s the total likely to be?

Biden announced on Friday that he’s in the process of assembling a multi-trillion dollar relief package that includes boosting direct stimulus payments to $2,000, as well as extending unemployment insurance and sending money to hard-hit state and local governments.

“The price tag will be high,” Biden said. “We need to provide more immediate relief for families and businesses now.”

While the details are far from finished, those remarks suggest that the next relief package may send Americans a part-two top-up payment worth $1,400 to round the $600 second stimulus check up to a total of $2,000.

Senate Minority Leader Chuck Schumer reiterated in a Jan. 12 letter that the Senate’s first order of business under Democratic control will be pushing to “increase direct payments to a total of $2,000.”

Lawmakers, however, could also decide to send a third, separate payment worth $2,000 to most middle-income Americans, though all of that depends on Congress’ level of comfortability with throwing more money at the crisis.

Sen. Joe Manchin, a Democrat from West Virginia, said in a Sunday interview on CNN that he would support a more targeted form of aid, rather than sending out money to everyone under a certain income threshold.

“Sending checks to people that basically already have a check and aren’t going to be able to spend that or are not going to spend it, usually are putting it in their savings account right now, that’s not who we are,” he said. “If you want to spend $2 trillion, $3 trillion: Invest it in infrastructure. … There’s a lot we can do to put people back to work.”

Getting any kind of stimulus legislation through would require support from every Democrat in a 50-50 split.

“One defection, and they no longer have a majority,” says Brad McMillan, chief investment officer for Commonwealth Financial Network. “Even in a blue Washington, there simply aren’t the votes. Yes, the Democrats control the House, but with a smaller majority than in the last Congress. The votes for anything radical just won’t be there.”

The $600 for every adult and child stimulus check policy came with a price tag of $167 billion, according to the Treasury Department and Internal Revenue Service. The Joint Committee on Taxation estimates that bringing those checks up to $2,000 would cost almost three times more: around $464 billion.

“The horse left the barn some years ago on deficit spending,” says Mark Hamrick, Bankrate’s senior economic analyst and Washington bureau chief. “In the end, with unemployment and new claims for unemployment benefits still historically elevated, and the pandemic still raging and claiming a heartbreaking number of lives, it is hard to see how lawmakers would stand in the way of something many of their constituents are eager to receive, namely money.”

A growing number of economists are seeing more aid as a high probability, not just a possibility, with Democrats now holding a bigger edge in the Senate. A base-case scenario for Congress is that they would pass a $900 billion relief bill in the first quarter, which includes legislation for more stimulus checks, extra joblessness aid and funds for state and local governments, writes Deutsche Bank’s chief U.S. economist Matthew Luzzetti in a note to clients.

How soon would you receive another check?

You shouldn’t expect a new stimulus payment in the near term. The timeline depends in part on how soon Ossoff and Warnock are sworn in and then how quickly lawmakers can strike a deal.

Biden will be inaugurated into office on Jan. 20, while the two new Georgia senators will have to be certified by the state’s election commission before they can be sworn in. After that, negotiations will take place, though another question is whether lawmakers might be occupied at that time with impeachment proceedings.

Slowing down the process might also be incorporating another round of checks into a larger relief package rather than a stand-alone bill, giving lawmakers more to work through. Biden’s Jan. 8 remarks about also prioritizing jobless benefits and municipal aid indicate that he’d at least like to see other measures included in the next round of aid.

Then comes the delivery process. More than two-thirds of second stimulus payments have already been delivered, according to The Wall Street Journal. That process kickstarted on Dec. 29 and will have to conclude, by law, on Jan. 15, as was specified by Congress in the $900 billion supplemental pandemic relief bill.

That’s record time compared with how long it took the IRS and Treasury to deliver the $1,200 checks that Congress approved in March. It doesn’t, however, erase some of the problems that many Americans have still had to encounter when they track their second stimulus payments.

The Treasury and IRS have already stated that they’d work to administer any extra top-up payments as soon as they’re passed by Congress.

Who is likely to be eligible?

If the next round of checks are anything like the last two rounds, how much you receive will ultimately be determined by the dollar amount of the checks.

Individuals earning up to $75,000 and married couples making $150,000 a year are eligible for stimulus checks the way they’re designed right now. After that, funds decrease by $5 for every $100 an individual made over that income line.

With $2,000 checks, individual Americans would be eligible for a partial check up until earning $115,000 a year, while married couples would earn a partial check up until having a joint income of $230,000. With $1,400 payments, that happens much sooner: up to $103,000 a year for individuals and $206,000 for married couples.

Lawmakers so far haven’t updated or changed eligibility for Economic Impact Payments (as they’re officially known), but that’s not to say it’s out of the question.

Recovery Rebate Credit: When to file?

With a third stimulus check appearing more and more likely, many Americans might be left wondering when they should file for their Recovery Rebate Credit and submit 2020 taxes.

That tax procedure is treated similarly to claiming a typical tax refund. Individuals can claim their stimulus payments if they for some reason didn’t receive their previous two checks or looked to be ineligible based on their 2019 taxes but had a change in their personal or income situation in 2020 (like losing a job or having a child, for example).

But experts say not so fast if you’re thinking about putting off filing your 2020 taxes and claiming your payment just because you want to wait and see about a third payment. That’s especially true if you’re facing economic hardship.

“You can only make the best decisions with what you have as of today,” says Eric Bronnenkant, head of tax at Betterment. “I would be cautious about speculating too much about where this third round might lie and how it might interact with other stimulus payments.”

Bronnenkant adds that lawmakers could decide to means-test the next round of checks or adjust eligibility, making them fundamentally different from the previous iterations.

If Americans reconcile an amount that they never received, it’ll reduce the amount that they owe or increase what they’re paid. “Things can only get better for you on this Recovery Rebate Credit,” Bronnenkant says.

But it remains to be seen whether Americans can file for these credits multiple times, given that they don’t exist in most years and therefore don’t have much of a precedent.

“The exact level of payments, $1,400 or $2,000, and how they might be tied to the tax filing season remains to be seen,” Hamrick says. “Stay tuned and keep an eye on, among other sources of information.”

Bottom line

Stimulus payment and other fiscal relief come at a crucial time for Americans, with more than 19 million currently claiming some type of jobless benefit. A January Bankrate survey found that just 39 percent of Americans could cover an emergency $1,000 expense with their savings, illustrating Americans’ precarious financial position.

During a period of intense economic turmoil, it’s advised that Americans cut back on their expenses and ramp up their savings as much as they can. And at the end of the day, it’s better to financially behave as if you won’t receive a payment anytime soon, rather than make big-ticket purchases you might not be able to afford without a third stimulus check in hand.

“These are tumultuous and precarious times for the pandemic, the economy and the country,” Hamrick says. “With Democrats having won both Georgia seats in the U.S. Senate runoff elections, the path has been cleared but not guaranteed for the legislative priorities of the Biden administration. For individuals, we’d advise that they consider how the money might be put to work, but certainly not to spend it in anticipation of any further payments. That should be done only after such funds hit their bank accounts.”

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Written by
Sarah Foster
U.S. economy reporter
Sarah Foster covers the Federal Reserve, the U.S. economy and economic policy. She previously worked for Bloomberg News, the Chicago Tribune and the Chicago Daily Herald.
Edited by
Senior wealth editor