Though vaccination rates are continuously increasing, and the United States is striving for pre-pandemic normalcy, we know that the already-existing inequities exacerbated by the COVID-19 pandemic will continue for years to come. But bipartisan legislation, such as the just-reintroduced Refund to Rainy Day Savings Act, can help families navigate an uncertain future.  

Led by Sens. Cory Booker (D-NJ) and Todd Young (R-IN), as well as Reps. Bonnie Watson Coleman (D-NJ 12) and French Hill (R-AR-2), the Refund to Rainy Day Savings Act allows those receiving a tax refund to opt into deferring 20% of their refund for six months, during which that portion will accrue interest. The second payment, released after the six months, can help to ensure that working families have emergency savings for unanticipated expenses. In addition, this legislation would create a three-year pilot program to test matched savings strategies for low-income families alongside the second refund. This pilot could be especially beneficial for families, given the range of factors that make it difficult for them to save for emergencies—low wages, volatile incomes, savings penalties and lack of access to safe financial products and services. Overall, the Refund to Rainy Day Savings Act seeks to provide working families with more options in how to receive their tax refunds. 

In July 2020, 35% of adults were unable to pay a hypothetical expense of $400 with cash or its equivalent. 

- Hilcia Acevedo

The bill’s reintroduction also seeks to authorize legislation that expands the flexibility of the AFI (Assets for Independence) grant program. This would widen the allowable eligible asset purchases, increase the maximum participant match and simplify the eligibility requirements for participation.  

Saving for emergencies has proven and continues to prove difficult for many families. The Federal Reserve Board reported that in July 2020, 35% of adults were unable to pay a hypothetical expense of $400 with cash or its equivalent.  

Many families have experienced changes in income and lifestyle as a result of unemployment, unexpected severe illness and death stemming from COVID-19, eviction  and changes in childcare accessibility. Such circumstances are accompanied by significant expenses that make it difficult to save money. Similarly, the lack of savings makes it difficult to mitigate these situations in a way that doesn't deepen family poverty or push families into it. In other words, there are families for whom significant expenses are financially debilitating and others for whom significant expenses compromise their ability to save. 

In drastically impacting families' finances, the COVID-19 pandemic has simultaneously exacerbated existing racial and class-related inequities. Black and/or Latinx communities—disproportionately low-income communities--are not being vaccinated at the same rate as their White counterparts. Thus, Black and/or Latinx communities are particularly vulnerable to some of the circumstances that produce financial shock and necessitate access to emergency savings, such as COVID-related death.  

In response to these changes and inequities, having access to emergency savings is of utmost importance for low- and moderate-income families. Successful passage of this bipartisan bill demands action. Contact your legislators to ask that they co-sponsor the Refund to Rainy Day Savings Act today!