Fact checked by Ryan Eichler
Reviewed by Robert C. Kelly

James Dimon, known as Jamie, is an American billionaire businessman and financial executive. He became chief executive officer (CEO) of JPMorgan Chase & Co. (JPM) in 2006 and chairman of the firm in 2007. Under Dimon’s leadership, JPMorgan Chase has become the largest U.S. bank by market capitalization.

Dimon served as a member of the Board of the Federal Reserve Bank of New York and is known for his key roles in building up Citigroup Inc. (C) and Bank One, acquired by JPMorgan Chase in 2004.

Key Takeaways

• James Dimon, known as Jamie, became chief executive officer (CEO) of JPMorgan Chase & Co. in 2006 and chairman of the firm in 2007.
• Dimon was a top executive at Citigroup, Bank One, and Travelers.
• Jamie Dimon served as a member of the Board of the Federal Reserve Bank of New York.

Early Life and Education

Jamie Dimon was born in New York City in 1956 to a family of finance and banking professionals. He has cited his grandfather, a Greek immigrant who was a stockbroker at Shearson, Hammill & Co., as a key influence in his early life.

Dimon attended the prestigious Browning School in New York City and Tufts University outside of Boston, eventually majoring in economics and psychology. He famously became a protégé of legendary finance executive Sandy Weill when Dimon wrote a thesis about the older financier.

After briefly working at Boston Consulting Group, Dimon matriculated at Harvard Business School. He pursued and obtained a Master of Business Administration (MBA) degree, was in the same class as hedge fund managers Seth Klarman and Steven Mandel, and graduated in the top 5% of his class as a Baker Scholar.

Important

Jamie Dimon has served on boards for the Business Roundtable, the Bank Policy Institute, and the Harvard Business School. He is also a member of the Financial Services Forum and Council on Foreign Relations.

Notable Accomplishments

After graduating from Harvard, Dimon took a position at American Express Co. (AXP) with American banker Sanford Weill, his mentor. He left American Express with Weill and became chief financial officer (CFO) and, later, president of Commercial Credit. Under Dimon’s leadership, Commercial Credit acquired Primerica Corp. in 1987 and The Travelers Corp. in 1993.

Dimon served as president and chief operating officer (COO) of Travelers in the 1990s while acting as COO of Smith Barney Inc., Travelers’ subsidiary. He later became co-chairman and co-CEO when Smith Barney and Salomon Brothers combined. In 1998, Travelers Group merged with major finance firm Citicorp. and formed Citigroup, with Dimon as the president. Weill fired Dimon from Citigroup in 1998.

In 2000, Dimon became chairman and CEO of Bank One. Within four years, the company’s stock climbed by 59%.JPMorgan Chase purchased Bank One in 2004, and Dimon became president and COO. Three years later, he was chairman and CEO of JPMorgan Chase. Dimon led JPMorgan Chase during the 2007–2008 financial crisis. He managed the crisis, having already sold $12 billion in subprime mortgages in 2006. JPMorgan bought the struggling Bear Stearns—once valued at nearly $12 billion—for just $260 million, and WaMu for $1.9 billion.

What Top Managerial Roles Has Jamie Dimon Held?

Dimon is the chairman and CEO of JPMorgan Chase & Co. and was a top executive at Citigroup, Bank One, and Travelers. He enhanced Commercial Credit through a series of strategic acquisitions, eventually forming Citigroup.

What Government Roles Has Jamie Dimon Held?

Dimon has served on the Board of the Federal Reserve. He has never been appointed to a cabinet position by a sitting U.S. president.

Why is Dimon Considered a Good Leader?

Dimon has a proven record of success building and expanding the banks and other firms that he leads. His ability to navigate his companies through extreme challenges such as the 2007–2008 financial crisis has earned him a reputation as a chief executive officer (CEO) who wins.

The Bottom Line

Jamie Dimon is the chairman and CEO of JPMorgan Chase & Co. He has held roles at Citigroup, Bank One, and Travelers. Dimon is regarded as a successful manager who navigated the 2008 financial crisis.

The Supreme Court’s decision to uphold 2024 federal legislation banning TikTok unless its Chinese parent company sells it could force millions of young Americans to find new sources of financial advice—and experts say that might be for the better. While each Gen Z user gained an average of 49 pieces of financial guidance from “FinTok” in 2024, surpassing traditional sources like family and friends, studies reveal that a vast majority of investment recommendations on social media contain misleading information or omit crucial risks.

Could a TikTok ban actually improve the financial information many Americans receive?

Key Takeaways

• Social media has become a primary source of financial information for Gen Z and Millennials.
• A TikTok ban would disrupt the “finfluencer” ecosystem but may also reduce the spread of questionable financial advice and investment scams.
• Alternative platforms are likely to fill the void if TikTok exits the U.S. market.

Financial Advice on Social Media

The rise of “finfluencers“–social media influencers focused on financial content–has transformed how younger generations learn about money management. Millions of young Americans now turn to social media as their primary source of financial information, with nearly 80% of respondents saying they have gotten their financial advice from social media, more than traditional sources like family members (35%) and internet searches (33%). This departs significantly from how previous generations were guided on financial matters.

While social media has made financial education more accessible and engaging for younger and more diverse audiences, it has also boosted the spread of oversimplified and potentially harmful advice. Indeed, a 2024 study found that more than 70% of investment recommendations found on social media platforms contained misleading information or failed to disclose important risks.

One recent analysis of finfluencer tweets showed that only 28% of influencers would generate positive monthly returns for their followers. More worrying, 56% of finfluencers exhibit what researchers term “antiskills,” leading to average monthly losses instead. Compounding the problem is that the researchers have found that these less-skilled influencers often have larger followings and wield greater influence over retail trading patterns than their more skilled counterparts.

The Impact of a TikTok Ban

In 2024, the U.S. passed legislation requiring Chinese parent company ByteDance to sell TikTok if it wanted to keep the app available to U.S. consumers. A January 2025 Supreme Court decision refused to halt the ban, leaving it in the hands of the incoming Trump administration.

Financial experts are divided on whether such a ban could meaningfully cut the spread of questionable financial advice. While TikTok tends to dominate the finfluencer space now, content creators could easily migrate to other platforms like Instagram, X, or YouTube Shorts.

However, TikTok’s algorithm has been particularly effective at amplifying sensational and viral content, often prioritizing engagement over accuracy, experts have claimed. TikTok’s exit might be the chance to provide better standards and oversight for financial content on social media.

Many argue that finfluencers serve an important function. While the conventional financial advisory field remains predominantly white and male (e.g., around 82% white and 75% male among certified financial planners), finfluencers are notably more diverse.

Ambreen Ben-Shmuel, a sociology researcher who has studied the finfluencer ecosystem, says “this diversity manifests not just in demographics but in communication styles and content focus.” She points out that female finfluencers often address previously overlooked topics like the intersection of mental health and money management, while finfluencers from various backgrounds bring attention to unique financial challenges faced by underrepresented communities.

The Bottom Line

While a TikTok ban could temporarily disrupt the flow of some social media-based financial advice, it’s unlikely to fundamentally solve the challenges of misinformation or bad advice online. The underlying demand for free, accessible financial information among younger generations remains strong, and content creators do reach more diverse audiences than traditional financial advisors. A more sustainable solution might lie in improving financial literacy education and developing better standards for online financial content across all social media platforms.

Facing car repairs can be stressful. Not only could a broken car leave you stranded on the roadside, but costly repairs could strain your budget. As a result, you may consider skipping the repairs and shopping for a new car. But that might not be the best financial choice, depending on your situation. It’s important to evaluate several factors, including the frequency and cost of repairs, the vehicle’s age, and the affordability of other cars. Then, you can determine which option would be best for you. 

Key Takeaways

• Americans are keeping their for 14 years on average.
• The average cost for maintenance, repairs and tires is 10.13 cents per mile, or $1,520 for every 15,000 miles you drive.
• The value of your car and the cost of a new are are among factors can help determine if you should repair or replace your car. 

Americans Are Keeping Their Cars Longer

According to the Bureau of Transportation Statistics, the average age of passenger cars in 2024 was 14 years.

For light trucks, that average age drops to about 12 years. That’s almost double the average age in 2000, which was 9 years for passenger cars and a little more than 8 years for light trucks.

Auto Repair Costs Are Higher Than Ever

Car repair costs vary based on several factors including the vehicle’s age, the make and model, the type of repair, and who performs the repair. Here are the average repair costs for some common car repairs according to Kelley Blue Book:

When Is it Time To Replace Your Car?

There are several factors to consider to see if you should replace your car. 

Frequency and cost of repairs

If your car needs repairs more often, it could be time to get a new car. Or, if the car repair estimate is more than the value of your current car, it may be better to get a new car. 

Gas mileage 

Gas prices also remain high, so having a car with great gas mileage can help you save money. If your gas mileage is on the decline or your car is fuel inefficient due to its engine size, getting another car with better gas mileage might save you money in the long run. 

Residual value of car 

As mentioned above, if your repair costs are more than the value of your car, replacing your car could be the better option. 

Payoff of current car loan 

Of course, if you have an existing car loan, you will likely need to pay off that loan before you sell your current vehicle. Lenders typically use the vehicle you purchase with a car loan as collateral.

Availability of affordable cars

With the rising car prices, it may be tough to find another car, whether new or used, that fits with your budget. It might take some time to shop around to find a car you like that you can afford. In the interim, your current car may require car repairs, which could take money away from a car purchase. 

Desire for new technology/safety features 

If you want a car with the latest tech or safety features, replacing your current car might be the right choice. The deciding factor likely would be if you could afford such a car. 

Insurance costs  

The newer the car, you may face higher car insurance costs. It’s important to evaluate if you can afford the cost of new insurance premiums. 

The Bottom Line

Because car and car repair prices continue to increase, many car owners are keeping their cars longer. Deciding between repairing or replacing your car depends on many factors, including the vehicle’s age, frequency and cost of repairs, and whether you can afford a new car. It’s important to review how much it would cost to keep repairing your existing car versus how much you can afford to spend for another car. That likely will be the deciding factor between repairing or replacing your car. 

Fact checked by Stella Osoba

Warren Buffett has increasingly argued in recent years that it’s not just the ubiquitous sports betting apps that have made your phone a pocket casino. In his 2024 annual letter to shareholders, the legendary investor warned that today’s stock market increasingly resembles gambling, with Wall Street profiting while everyday investors chase quick wins through trading apps.

Key Takeaways

• Research shows modern stock trading shares concerning similarities with gambling addiction, with up to 90% of online day traders losing money and some seeking help from gambling treatment clinics.
• Buffett claims that mobile trading apps have helped create a “casino in your pocket” phenomenon that Wall Street profits from through trading fees.
• While speculative trading can mirror gambling, traditional buy-and-hold investing in quality companies still offers a proven path to long-term wealth creation, as demonstrated by Buffett’s success.

Buffett’s casino comparison captures an uncomfortable truth about today’s stock market: the easier it’s become to trade, the harder it’s been for many to build wealth. The good news? You don’t need to beat the house at its own game.

What Warren Buffett Said

Warren Buffett is perhaps the most famous person who has lamented the rise in speculative trading. The legendary investor claims patience and research are a thing of the past. Now, he says, the modern investor mindlessly jumps into stocks that are popular and hopes for a quick payoff as if they were at a casino.

In his 2024 annual letter to shareholders, Buffett blamed Wall Street for encouraging reckless behavior, claiming that the main party to benefit from the frenzied trading are big financial institutions, and said the risk is made much worse because “the casino now resides in many homes and daily tempts the occupants.”

Buffett issued a similar warning in 2022. During his annual shareholder meeting that year, he also blamed the introduction of investing tools like call options for turning the stock market into a casino.

A buy-and-hold approach might not deliver the dopamine hit of day trading, but it has proven far more reliable over time.

How the Stock Market Compares With Gambling

Studies have found that most online traders lose money at rates strikingly like casino patrons—between 70% and 90% end up with less than they started with. More concerning is how trading behavior can mirror gambling addiction: rapidly decreasing hold times for stocks, compulsive checking of prices, and a growing number of day traders seeking help at gambling treatment clinics.

Many traders fall into the same mental traps as casino gamblers: overconfidence in their ability to spot “winning” trades, chasing losses with increasingly risky bets, and becoming mesmerized by stories of overnight millionaires. The instant gratification of mobile trading apps has only amplified these tendencies. With every stock purchase just a tap away, the measured research that once defined investing has often been replaced by quick decisions based on social media tips and market momentum.

How You Can Avoid the Casino Trading Trap

The way to avoid casino-style trading requires something many investors find challenging and far less exciting: patience. While stories of overnight crypto millionaires and meme stock fortunes can be tempting, the real path to building wealth looks very different.

In his 2024 letter, Buffett emphasized that lasting wealth comes from identifying quality companies when they’re undervalued and then doing something that seems almost radical today—nothing. “Thanks to the American tailwind and the power of compound interest,” he wrote, “the arena in which we operate has been—and will be—rewarding if you make a couple of good decisions during a lifetime.”

As soon as industry leaders with a long history of success and timeless appeal become undervalued, he advises buying their shares and then being patient.

Instead of chasing hot tips and market momentum, successful investors focus on understanding businesses, recognizing value, and letting compound interest work its magic over time.

The Bottom Line

An increasing number of investors, buoyed by get-rich-quick stories, are trading in a way that ensures the house almost always wins.

It doesn’t have to be that way, however. With education and patience, it’s possible to have the odds stacked in your favor.

Fact checked by Vikki Velasquez

Retirement is a dream for many people. It frees up your time so you can do things you may have put off during your working life, such as traveling or buying a vacation home. But, all of this costs money.

While the rule of thumb has generally been to save between 70% and 80% of your pre-retirement income (remember, that’s just a suggestion) to accomplish your goals, many Americans still find trouble saving money for their nest egg.

Here’s what financial advisors suggest to get you closer to your dream.

Key Takeaways

• Experts suggest saving 70% to 80% of your pre-retirement income for retirement.
• Almost half of the U.S. population doesn’t have retirement savings.
• Plan and save for leisure and recreation by understanding the costs and narrowing your focus.

How Much Are People Saving?

Over 54% of Americans are prepared for retirement, with most using employer-sponsored plans like 401(k)s and 403(b)s to save for the future. In January 2025, Empower reported that the average American’s retirement savings balance was $492,795. Those in their 60s were reported to have the highest balances at an average of about $1.2 million.

But, most savers aren’t taking full advantage of the retirement options available to them, according to Pam Horack, certified financial planner (CFP) at Pathfinder Planning in Lake Wylie, South Carolina. “Many of them don’t maximize the savings they can make here and have little other savings outside of that,” she told Investopedia in an email.

Having some retirement savings is better than nothing, though, especially when you consider that 46% of Americans reportedly had none at all. This can be troubling if you want to retire, as experts say that you shouldn’t rely on Social Security alone to achieve your goals—especially if you want to include leisure and recreational activities into your lifestyle.

Note

Consider tax-free income sources, such as a Roth IRA, cash-value life insurance, and municipal bonds, to supplement any other investments you have for your retirement nest egg.

How to Afford Leisure During Retirement

Some of the most common things people say they want to experience after they retire include buying a vacation home or recreational vehicle, traveling, and taking up different hobbies. Make sure you understand the associated costs so you’re prepared ahead of time (remember: these costs are likely to change):

You should be as specific as possible so you can plan and make realistic savings goals, according to Horack.

For instance, if you’re interested in travel, she suggests narrowing down where you want to go (domestic or international), whether you want active vacations or sightseeing tours, and whether you want to travel first class or with a mission team. “Helping define the goal by equating it with their values allows us to plan better,” she said.

Remember, though, that it’s important to plan for your day-to-day living expenses before you start saving for recreational pursuits, according to Jonathan Barrett, founder and managing partner of Barrett Financial Solutions in Woodbridge, New Jersey.

“Many individuals aspire to achieve ‘luxury‘ goals in retirement. The first step is to devise a financial plan to meet your ‘needs’ in retirement,” he said. “If you have the capacity to save beyond that, allocate whatever is feasible within your means to achieve future aspirations.

The Bottom Line

Start saving for retirement as early as possible so you can maintain your standard of living and afford some of the things you want to do, whether that’s traveling or a new hobby. When you’re younger, you have a greater tolerance for risk, which means you can ride out market and economic volatility and still have time to recover.

Your investments will also grow more because of compounding. If you’re older, don’t fret, because you still have time. Barrett suggests the best way to start is to look for areas where you can cut your discretionary spending so you can allocate that money for savings.

Fact checked by Vikki Velasquez
Reviewed by David Kindness

Private Credit vs. Private Equity: An Overview

Securities traded on the public markets, like stocks and bonds, may be the backbone of most everyday investors’ portfolios. But there are also plenty of alternative investments that aren’t publicly available, like private credit and private equity.

These assets can be quite profitable, but because they’re also risky and tend to tie up capital for a long time, trading generally takes place among institutional investors and accredited investors.

In the private credit market, investors make loans to businesses and sometimes individuals who may have trouble accessing credit from banks or the public market. Because there is often a heightened risk that the borrower may be unable to repay the loan, private credit investors can collect higher interest rates than they would earn on bonds or other debt investments.

Private equity investing, meanwhile, involves taking an ownership share in a company that isn’t currently traded on the public markets. Unlike a stock, which can be easily bought and sold on a public exchange, private equity investments require investors to make a longer-term commitment with their capital. In exchange for this lack of liquidity, private equity investors also look for elevated returns.

The chance for outsized gains might make private credit and private equity attractive to investors who have access to these private markets.

Key Takeaways

• Private credit investors lend money to borrowers who may have trouble accessing loans elsewhere, while private equity involves buying ownership shares in a nonpublic company.
• These investments may offer attractive returns, but their riskiness and illiquidity make them more suitable for institutional investors and accredited investors.
• Private credit offers more predictable and stable returns, while the higher upside potential of private equity comes with the risk of significant losses.

Private Credit

When you invest in private credit, you lend out your money—mainly to companies, but occasionally to individuals—and then generate returns by collecting interest payments.

Private credit plays an important role in the financial system by making loans available to businesses that may not be able to secure them through banks or the public debt markets.

The borrowers seeking these private, non-bank loans often have credit ratings that are below investment grade, suggesting a heightened risk that they may not be able to pay their debts. To compensate for the greater risk of default, they generally have to pay higher interest rates. This means the potential for higher profits for investors willing and able to stomach the risk.

Note

Private credit investing is much like buying a bond, with the main difference being that private credit isn’t traded on the public markets and typically isn’t available to the general investing public.

As investors in private credit are making loans, rather than acquiring an ownership stake, they are more likely to be repaid if the borrower faces bankruptcy. In addition, there is a chance for diversification, with the flexibility to invest in different types of loans with distinct risk/return profiles. Private loans often have floating interest rates, which can benefit investors when rates increase.

However, given the risks involved, private credit firms often require investors to meet strict accreditation standards and start with a high minimum investment. Private credit firms also make loans for extended terms, requiring investors to commit their capital over long time frames.

Large institutional investors are central players in the private credit industry because they have the scope and expertise to manage these potential drawbacks.

Pros

• Rapid growth of industry

• Predictable returns outperforming other fixed-income options

• Diversification and low correlation with public markets

• Priority for repayment (as creditor) in case of bankruptcy

• Flexibility to manage risk by selecting different types of loans

Cons

• Stringent accreditation requirements and high minimum investments

• Illiquidity

• Increased default risk

• Management fees

• Lack of transparency and regulatory protections

Private Equity

Rather than making a loan, investors in private equity are acquiring an ownership stake in a company. Private equity firms typically pool together assets from institutional investors and accredited investors into large investment funds.

Then they use this money to acquire companies. This may include purchasing businesses that are already privately owned or taking control of public companies in their entirety. Firms often form consortiums with other investors to complete these buyouts.

Once a private equity firm has taken control of a target company, it will carry out a strategy to increase the value of its investment. That could include significant restructuring or cost cutting. The goal is to add value and then exit the investment, which could be done through a sale to another owner or by taking the company public through an initial public offering (IPO).

Note

Private equity firms typically invest in more mature companies. This stands in contrast with venture capital, another type of alternative investment that acquires stakes in startups and early-stage companies before they offer their shares to the public.

A successful private equity transaction can be very profitable for investors. However, because these exit strategies take time to develop, private equity investors also tend to have their investments tied up for extended periods.

In addition, along with the chance for stellar gains from private equity comes the risk of painful losses. As shareholders, private equity investors would be among the last to be compensated in the event of bankruptcy, meaning they could lose 100% of their investment.

Given the lack of liquidity and heightened risk levels, private equity firms also limit participation to institutions and individuals with significant wealth and financial sophistication. However, these high barriers to entry haven’t restricted the growth of the private equity market.

Pros

• Rapid growth of industry

• Possibility for huge returns

• Diversification and low correlation with public markets

• Increased control over management decisions

• Potential to benefit from expertise of private equity firm

Cons

• Stringent accreditation requirements and high minimum investments

• Illiquidity

• Management fees

• Lack of transparency and disclosure requirements

• Limited recourse in case of bankruptcy, with chance of losing entire investment

Key Differences

Private credit and private equity share some key similarities. They both represent alternative investments available only on a private basis. In addition, they typically have strict accreditation standards and require lofty minimum investments, leading to a concentration of institutional investors in both areas.

Management fees also tend to be high for these private investments, but investors are rewarded with the potential for outsized returns. This helps explain why both asset classes have experienced tremendous growth in recent decades.

There are also some important differences to keep in mind. For one thing, private equity involves taking an ownership stake, while private credit represents a loan. This makes the two types of investment quite different in terms of their risk-reward profile.

Private equity investors could earn huge profits if and when the company they invested in is sold or brought public. Conversely, they could lose their investment entirely if the company is unsuccessful. Meanwhile, returns for private credit investors are more predictable—established by the terms of the loan and relatively stable (provided the borrower doesn’t default).

Which Is Better: Private Credit or Private Equity?

Private credit and private equity are both alternative assets that could be attractive to investors looking for different benefits for their portfolios. Private credit may be appropriate for investors seeking relatively stable and predictable returns that often exceed those of bonds and other fixed-income assets. Private equity could be suitable for those in search of high potential returns, although this also means elevated risks.

What Types of Investors Typically Invest in Private Equity?

Private equity often requires a high minimum investment and a commitment of capital for years or even decades. Given these characteristics, private equity firms typically vet investors based on strict accreditation standards. For this reason, institutional investors and individuals with a high net worth or strong financial expertise dominate the private equity space.

Why Is an Investor Likely to Opt for Private Credit Over Private Equity?

Investors may choose private credit over private equity if they are seeking more predictable and stable returns. Because they are acting as creditors rather than equity holders, private credit investors assume lower levels of risk, but their potential profits are limited to the interest generated by the loan.

The Bottom Line

Investing in private credit involves making loans to companies or individuals and collecting interest payments, while private equity investors acquire an ownership stake in a company whose shares don’t currently trade on the public markets.

Both of these investment classes may offer higher potential returns than their publicly traded counterparts, but they also tend to be highly expensive, less liquid, and less transparent, making them more suitable for institutional investors and accredited investors.

Fact checked by Vikki Velasquez

Tax Day is coming on April 15, 2025 and yours might be one of the 62% of returns that ends up getting a tax refund. There are smart ways to use that money to invest in both your short- and long-term financial health if you get an unexpected refund,

Key Takeaways

• A tax refund is a reimbursement from the government when you’ve paid too much in taxes during the year.
• Tax refunds can happen if you fill out your W-4 incorrectly, overpay your estimated taxes, are eligible for a refundable tax credit, or receive the Recovery Rebate Credit in 2025.
• You can use an unexpected tax refund to pay down debt, save for emergencies or college, invest for retirement, and even splurge a little.
• Tax audits can also surprisingly result in refunds.

What Is a Tax Refund?

A tax refund happens when you’ve paid too much in taxes so the government sends you a reimbursement. This can happen with state or local taxes but the largest refunds come from the federal government. The average federal tax refund was $2,948 in April 2024.

Some taxpayers may know that they’re likely to receive a refund. A freelancer who pays estimated taxes may overpay each quarter to avoid an unexpected tax bill due to the possibility of higher-than-average income at the end of the year.

Other taxpayers may not know they’re going to receive a refund until they finish preparing their tax return and realize that the IRS is sending them some money.

Important

You can check the status of your payment with the Where’s My Refund? tool on the IRS website if you expect to receive a tax refund,

Reasons You Could Get a Tax Refund

You might end up with an unexpected tax refund for several reasons.

Form W-4

Tax form W-4 is used to estimate how much income tax your employer should withhold from your paychecks and send to the Internal Revenue Service on your behalf. Your employer might have withheld too much all year if you didn’t complete the form correctly and you’d be entitled to get some of that money back.

You also might get an unexpected tax refund if you didn’t update your W-4 when you were supposed to. Your withholding rate should change if you had a major life change such as having a new baby, You’re probably having too much withheld from your paycheck if you didn’t update your W-4 with your employer after this kind of change.

Estimated Tax Payments

Many self-employed workers or freelancers make high estimated tax payments throughout the year to avoid a surprise tax bill in April. You’ll likely be entitled to a refund at tax time if you overpaid your estimated taxes throughout the year, especially if you didn’t account for business expenses when making estimated payments.

Tax Credits

A refundable or partially refundable tax credit such as the Earned Income Tax Credit (EITC) or the Additional Child Tax Credit can result in a tax refund. Most tax credits only reduce the amount of tax you owe down to $0 and the government keeps any amount that’s left over. Refundable credits can be sent to you as a tax refund, however, if they’re greater than the amount of tax you would otherwise owe.

Recovery Rebate Credit

The Internal Revenue Service announced in 2024 that taxpayers who were eligible for stimulus payments in 2021 but who didn’t claim the Recovery Rebate Credit will receive those payments in 2024 and 2025. The payment will be sent directly to you if you filed your 2021 tax return but didn’t claim the credit. You can claim it when you file your 2024 tax return in April 2025 and you’ll receive the credit as part of your tax refund if you didn’t file taxes in 2021.

Being Audited

Another surprising reason you might get a tax refund is that you’ve been audited. “We actually are able to correct people’s accounts all the time,” says Alyssa Maloof Whatley, a tax attorney who specializes in disputes with the IRS. “It’s not like every audit will end in someone owing money.”

Taxpayers often think of an audit as the government trying to collect additional taxes, but Whatley explains that the most common cause is a computer program flagging something in their tax return that doesn’t match other information the government has on file. This can result in an unexpected refund in some cases.

What to Do With a Tax Refund

Your first instinct might be to simply increase your spending that month if you get an unexpected tax refund or use it for a splurge you couldn’t otherwise afford. “Don’t just go to, ‘Oh I’ve always wanted to go on this trip,'” advises Melissa Joy, CFP, CDFA, and president of Pearl Planning. She tells her clients to think carefully about where that money should go instead. “Ask yourself where you can alleviate pain or increase safety.”

Pay Off High-interest Debt

“On the debt side, it starts with the interest rates,” says Joy. High-interest debt like credit card debt, personal loans that have a high interest rate, or a home equity line of credit can feel impossible to get on top of because the interest payments add up quickly.

It can help you eliminate a large part of that debt or even all of it if you suddenly have money from a tax refund. “Pay off things that should be short-term debt but have turned into medium or long-term baggage,” says Joy. “You’ll feel less burdened right away.”

Build Up Your Emergency Reserves

Consider using your tax refund to create an emergency fund if you don’t have high-interest debt to pay off. This kind of reserve can help prevent you from taking on high-interest debt in the first place when something unexpected happens. Even a small emergency fund can save you from having to put a surprise expense like a car repair or a broken refrigerator on a credit card.

“People can be afraid to use their emergency fund but that’s what it’s there for,” Joy points out. “Things are always going bump in the night so having an emergency reserve can really save you from having to tap into that high-interest debt.”

Save for Retirement

The next thing to tackle is saving for retirement if you’re not carrying high-interest debt and you have something saved for an emergency. Opening a retirement savings account can come with tax advantages as well as contribute to your future financial health.

You can open a Roth IRA or a traditional IRA regardless of whether you have another retirement account through your employer. A Roth IRA is funded with after-tax dollars so you don’t have to pay taxes on withdrawals in retirement. A traditional IRA lowers your tax bill now. The total contribution for any kind of IRA in 2025 is $7,000.

You can open an IRA through brokerage accounts and banks.

Avoid Student Debt

Paying off long-term debt can weigh down your financial life even if you aren’t paying high interest rates. A large chunk of money from a tax refund can help you put a significant dent in those payments.

“Focus on smaller, more enduring debt like student loans that have just been there forever,” suggests Joy. And you can use your tax refund to help your kids avoid it if you don’t have student loan debt of your own. “Maybe you put half toward your student loans and half toward a 529 plan so your kids aren’t saddled with that kind of debt in the future.”

Splurge a Little

It’s smart to invest in your long-term financial health, but it’s frustrating to get an unexpected windfall and feel like you don’t get to spend any of it. You may want to set aside a little bit of your tax refund for something fun after you’ve put most of your money toward your big-picture goals.

“It’s okay to invest in your current self,” Joy says. That could be something recreational like a trip with a friend or loved one or professional such as a course or certification that will improve your resume. “Don’t spend it all that way,” Joy advises. “But it’s okay to give yourself a budget for a certain percentage that’s a splurge.”

The Bottom Line

It can be exciting to get a refund at tax time but ultimately, Joy says, a yearly refund shouldn’t be your goal. “That means you’ve lent your money to the government,” she explains. “You could be using that money throughout the year and keeping control of it yourself.”

Be thoughtful about how you use it, however, if you do find yourself with an unexpected refund. Invest in your long-term financial health by paying down debt, planning for emergencies, or saving for retirement. It’s okay to have a little fun with your money, however, after you’ve got those covered.

“Everyone needs a splurge now and then,” Joy says. “Just be smart about how you’re spending that money.”

Companies may champion equal opportunity but paychecks don’t reflect it

Reviewed by Michelle P. Scott
Fact checked by Jiwon Ma

With much of its early history rooted in the free labor of enslaved Africans and Native Americans, income inequality in the United States is substantially older than the country itself. Efforts to close these wage gaps are far more recent.

Key Takeaways

• The wage gap represents the unfair divergence between the pay of different groups of people, often by demographic characteristics.
• Overall, Asian workers have the highest median weekly income, followed by White, Black, and LatinX workers.
• The opportunity gap—unequal employment opportunities among various groups—is another socioeconomic divide.

Understanding the Wage Gap

The Cambridge Dictionary defines a wage gap as “the difference between the average pay of two different groups of people.” Consistent income inequality can lead to a population group or groups amassing more wealth than others. Among the organizations that track these kinds of wage gaps are the Federal Reserve, the Economic Policy Institute, and the Urban Institute.

Some pay gaps can be explained by educational differences and geographic location factors. However, even when you control for such factors, wage disparities remain prevalent. Intentional, system-wide laws and practices underlie these differences and have played a role in creating them.

For example, several deregulatory legal edicts, including the Commodity Futures Modernization Act of 2000, created a high-risk economic environment that eventually led to a sudden, massive withdrawal of credit that ultimately resulted in the Financial Crisis of 2007–08, further exacerbating existing inequalities. Discriminatory recruitment practices have also played a prominent role in perpetuating wage gaps, particularly with regard to high-paying professions. For instance, African Americans are underrepresented in science, technology, engineering, and math careers.

According to a 2018 study from the Pew Research Center, 72% of Black STEM (science, technology, engineering, mathematics) professionals cite discrimination in recruitment, hiring, and promotions as a major causative factor. Also causative and earlier in the process: 77% of these professionals report being less likely to have access to quality education that prepares them for these careers—another result of the nation’s income inequality and the unequal educational system that property-tax-based school funding produces.

Laws Governing Wage Discrimination

The key law, Title VII of the Civil Rights Act of 1964, is about 60 years old. It banned compensation discrimination due to “race, color, religion, sex or national origin.” Then, in 2009, came the Lilly Ledbetter Fair Pay Act, which amended prior changes to several federal laws protecting workers’ rights and clarified that all inequitable, discriminatory payments are illegal, regardless of how long those pay decisions or practices occurred.

Passing laws is an important step toward societal change, but often, these laws do not produce or complete that change. That’s not to say there hasn’t been any progress. But such progress has not reached all groups or been experienced equally. For instance, Native American wage growth and employment continue to decline—factors contributing to a high poverty rate (one out of three) and an annual median income of only $49,906 annually.

Despite everything that has changed over the past 60 years, substantial discriminatory earning gaps among various population sectors persist. The largest wage gap by far is by race.

Wage Trends by Race and Gender

There are notable wage gaps among American workers by race. Those of Asian ancestry have a higher weekly median income than White, Black, and LatinX individuals, according to the Bureau of Labor Statistics data for Q2 of 2023. In addition, men generally earn more than women.

Black and LatinX workers have the lowest weekly median income, with Black men and women making more than LatinX men and women, respectively. This has obvious consequences: According to our research, Black and LatinX families were twice as likely to have no wealth (or debt), according to a 2021 study from the Federal Bank of St. Louis.

Note also that the higher earnings of some Asian Americans don’t mean that all Asian Americans earn more. According to the Department of Treasury, there is much greater wealth inequality among Asian Americans than among White Americans. Non-wealthy Asian Americans are poorer than their White counterparts, and wealthy families are richer.

White workers make up the largest segment of the U.S. job market, and Asian Americans the smallest.

Does Education Help?

So what happens to the wage gap if you control for education? Does it shrink or go away? The answer shows a complex picture. For instance, s for workers with a bachelor’s degree or higher in 2016 followed a nearly identical pattern to the overall median weekly income chart above.

Asian workers earned the most, followed by White, Black, and LatinX workers. In all cases where educational attainment was limited to an associate’s degree or less, White workers earned more than Asian ones. Similarly, Black workers with an associate’s degree or lower earned less than LatinX or Asian workers.

Education does make a difference: The gaps are narrower than they are for workers overall when a constant amount of experience and identical job titles are accounted for, though it once again follows the overall pattern. Between 2017 and 2019, Black men earned “98 cents for every dollar earned by men of other races with the same experience and education doing the same job in the same location,” according to 2020 research from SHRM (the Society of Human Resources Management). This results in 99 cents for Latinos, $1 for White men, and $1.02 for Asian men.

Similar research shows a deeper earnings divide across job titles between men and women, particularly for Black women. Black women typically make just 66 cents for every dollar white, non-Hispanic men make and 96 cents for every dollar paid to Black men. A Black woman with a high school diploma could earn $31,910 annually, but her White, non-Hispanic counterpart earns $48l950 for the same role.

The Opportunity Gap

Looking deeper at the origins of the wage gap, one encounters another socioeconomic divide that affects a person’s earning potential: The opportunity gap. This concept “refers to the ways in which race, ethnicity, socioeconomic status, English proficiency, community wealth, familial situations, or other factors contribute to or perpetuate lower educational aspirations, achievement, and attainment for certain groups of students.” It has obvious professional consequences clearly connected to income inequality.

Gap Contributors

One clear part of the opportunity gap is the unequal distribution of social capital based on people’s personal relationships and networks across different classes, races, and other groups. Upward economic mobility can be difficult without access to social networks that connect and interact with high-earning individuals and/or institutions. Simply put, having friends, family members, or other social connections in high places makes it easier to secure job opportunities, such as by having a contact willing to provide referrals to potential employers.

Further contributing to the opportunity gap are the ways people are recruited into particular fields and which groups benefit from them. For instance, high-paying careers, such as the majority of STEM professions, typically require some form of post-secondary education. Research published in the International Journal of STEM Education notes that a lack of peers, senior mentorship, and culturally relevant educational programming has been shown to discourage minority students from completing their STEM programs.

Then, as the Pew study showed, there’s the sheer racism in the job market encountered by those seeking employment. For instance, a 2016 study by researchers at the University of Toronto and Stanford University reported that resumes were 30% to 50% less likely to lead to job callbacks from employers if they contained “minority racial cues,” such as names typically associated with Black or Asian identities. The researchers went on to replicate those findings in a 1,600-resume study of their own.

Occupational Segregation and Unemployment

Another aspect of the racial income gap is occupational segregation, which occurs when a demographic group is overrepresented or underrepresented across and within certain occupations. For example, Black men are more often employed in lower-paying industries than White men, who are far more likely to occupy high-paying senior positions. Of all the Fortune 500 CEOs in 2023, only 1.6% were Black.

And finally, unemployment plays a major role in income disparity: A December 2019 study comparing Black and White workers from the Center for American Progress reports that the employed share of Black workers between November 2018 and October 2019 was 75.7%. The figure for White workers during the same period was 80.8%.

What Is the Current Wage Gap?

Across races, women are paid less than men. Black men and women are paid less than their White peers, who generally make less than Asians, and LatinXs are typically paid less than Blacks.

What Is the Meaning of Wage Gap?

A wage gap is the difference in pay based on gender, race, or other discriminatory factors.

What Causes the Wage Gap?

There are several reasons wage gaps exist. According to the Department of Labor, the gender wage gap exists because women are undervalued. Racial gaps exist due to socioeconomic reasons, including race, ethnicity, status, and many other factors.

The Bottom Line

Despite ever-increasing efforts to promote equal opportunity and diversity within the U.S. labor market, race and gender discrimination remain pervasive. If companies are truly committed to fostering real social change, a good place to start is by eliminating any bias that prevents everyone from being paid a fair and equitable wage for their work.

HUD works to support housing, cut homelessness, and fight discrimination

Reviewed by Michelle P. Scott
Fact checked by Kirsten Rohrs Schmitt

What Is the Department of Housing and Urban Development (HUD)?

The purpose of the U.S. Department of Housing and Urban Development (HUD) is to provide housing and community development assistance and to make sure everyone has access to “fair and equal” housing.

To achieve these goals, HUD runs or participates in many programs intended to support homeownership, increase safe and affordable rental housing, reduce homelessness, and fight housing discrimination.

HUD is led by the HUD secretary, a member of the president’s cabinet who is nominated by the president and confirmed by the Senate. Matthew Ammon is acting secretary, and President Trump has nominated Scott Turner, who will need to go through the confirmation process.

Key Takeaways

• The U.S. Department of Housing and Urban Development (HUD) is a cabinet-level government agency.
• The agency is run by a secretary, appointed by the president and approved by the Senate; the secretary typically holds the position until a new administration comes into power.
• HUD’s purpose is to make sure communities have enough housing and any other development assistance they might need.
• HUD runs, or helps run, programs that encourage homeownership and rentals, reducing homelessness and diminishing housing discrimination.
• HUD also oversees the Federal Housing Administration (FHA), which Congress created in 1934.

Understanding the Department of Housing and Urban Development (HUD)

HUD was established in 1965 under President Lyndon B. Johnson. It is a cabinet-level government agency, meaning that the agency’s head, called the secretary, is appointed by the president and approved by a simple majority vote in the Senate. The secretary then holds that position until they leave or a new president takes office. HUD’s predecessor was the Housing and Home Finance Agency, formed in 1947.

In the event of a major catastrophe, the HUD secretary is 13th in line to succeed the president, after higher-level cabinet executives such as the secretary of state and secretary of the treasury. The HUD secretary reports to the president of the United States (POTUS) . 

The federal government’s involvement in housing stretches back much further than the creation of either agency, however. In 1918, for example, the government helped finance the building of homes for workers in industries contributing to World War I efforts.

Mission

HUD’s mandate is to oversee various federal housing programs in the name of promoting fair and equal housing. Under HUD’s fiscal years 2022–2026 strategic plan, the department’s mission is “to create strong, sustainable, inclusive communities and quality affordable homes for all.”

The agency further states it aims to advance housing justice and reduce homelessness.

HUD’s first overarching goal is to “ensure HUD centers its focus on people, and their lived experiences, with policy and programs that are equity-focused, anti-discriminatory, and that advance housing justice, so that everyone has an affordable, healthy place to live.”

HUD’s Initiatives

HUD is responsible for national policy and programs that address housing needs in the U.S. Through various initiatives, HUD works to:

• Strengthen the U.S. housing market
• Ensure there is enough quality, affordable rental housing
• Improve people’s quality of life by improving their housing
• Strengthen communities
• Enforce fair housing laws

HUD and the Federal Housing Administration (FHA)

HUD also oversees the Federal Housing Administration (FHA), which Congress created in 1934. The FHA is primarily known for its mortgage insurance program, which enables homebuyers—who might not otherwise qualify for a conventional mortgage due to a low credit score, a small down payment, or a history of bankruptcy or foreclosure—to get an FHA home loan.

Fair Housing Act

HUD oversees several programs and rules that you might have heard of.

The Fair Housing Act, passed in 1968, governs most of the housing market and prohibits discrimination based on race, color, national origin, religion, sex, familial status, and handicap when housing is rented or sold or when a homebuyer applies for a mortgage.

The Community Development Block Grant (CDBG)

The Community Development Block Grant program provides grants to cities and counties to implement activities directed toward the revitalization of neighborhoods, economic development, and providing improved facilities and services.

Grantees must use the funds in ways that will:

• Primarily benefit low- and moderate-income residents
• Prevent or eliminate slums or blight
• Address urgent community problems, such as natural disaster recovery, that threaten residents’ health and welfare

Housing Choice Voucher Program

HUD also oversees the Housing Choice Voucher Program, commonly referred to as Section 8. This program helps very low-income families, older people, and people with disabilities pay for rental housing that meets or exceeds minimum health and safety standards. Rentals do not have to be located in subsidized housing projects, and local public housing agencies are responsible for distributing the vouchers.

$72.6 billion

The budget for the Department of Housing and Urban Development (HUD) in fiscal year 2025.

How HUD Helps Communities

At the end of 2023, HUD announced that it had accomplished a 20-year record: 120,000 new incremental vouchers over a three-year period. In addition, the agency announced that the efforts of the FHA led to a significant number of new homebuyers and the highest first-time homebuyer rate in over two decades.

HUD also doubled its funding for the Eviction Protection Grant program in 2023—a brand-new program funded for the first time in 2022—and provided legal assistance for over 19,000 low-income tenant households at risk of, or subject to, eviction. In January 2025, Hud announced $40 million in funding to 21 non-profit and governmental recipients.

There were two new offices established by HUD in 2023: an Office of Disaster Management (ODM) in the Office of the Deputy Secretary and an Office of Disaster Recovery (ODR) in the Office of Community Planning and Development. During the four years of the Biden-Harris administration, HUD helped more than 2.3 million people buy their first home and served more than 1.2 million borrowers of color. 

HUD has also developed several case studies to highlight programs it considers successes. Below are a few examples.

Important

Between 2022 and 2023, the number of people experiencing homelessness in the United States increased by 12%, or roughly 70,650 additional people. Hispanic or Latinx individuals represented the largest percentage of that increase at 55%.

Portland, Oregon

In Portland, Oregon, HUD contributed $3.3 million toward financing Bud Clark Commons, an eight-story, LEED Platinum-certified development that provides both transitional and permanent housing to help those struggling with homelessness.

The complex also houses case-management services to help people who are homeless overcome problems such as mental illness, chemical addiction, and unemployment.

Since opening in 2011, the Commons has served more than 7,000 people, connected 3,600 with social services, and placed 350 in permanent housing. Most of the development’s funding came from tax-increment financing and low-income tax credits from the city of Portland, but HUD’s financing filled in the gaps. 

Anchorage, Alaska

HUD also helped finance an Anchorage, Alaska, revitalization program started in 2004 in an older neighborhood called Mountain View, one of the city’s oldest neighborhoods. Housing investments have decreased vacancy rates and raised property values.

El Paso, Texas

A third success story comes from El Paso, Texas, where about $11 million of the $14 million used to create a 73-unit affordable housing development for very low-income older people came from HUD.

The Paisano Green Community boasts zero net energy consumption, LEED Platinum certification, and average monthly energy costs of $18.30 per apartment unit and $21.11 per townhouse unit—despite El Paso’s desert climate, where summer highs are in the mid-90s and winter lows are in the 30s.

Criticisms of HUD

The Department of Housing and Urban Development has done immeasurable good in providing safe housing to Americans and lifting people out of poverty. At the same time, the organization is often subject to criticism, which comes mainly from organizations and individuals that support limited government. They argue that government programs often don’t work as intended and that HUD’s activities are best left to local governments and the private sector.

In some locations, Section 8 vouchers are in such high demand that there are long waiting lists; waiting lists can even be closed in areas of very high demand. And while the program allows participants to rent any available housing, in practice their choices are often severely restricted and the options are undesirable.

Critics add that Section 8 vouchers tend to concentrate low-income families in impoverished neighborhoods. Also, because HUD sometimes sets the value of its vouchers too low for local housing-market conditions, few landlords are willing to accept the vouchers. Some of those who do abuse the system.

The program also imposes annual housing safety inspections on landlords who rent to Section 8 tenants and has a reputation for paying landlords several months late. 

According to the Cato Institute, HUD has provided grant funds that have been abused, given unneeded subsidies to developers at taxpayers’ expense, and experienced a number of incidents involving mismanagement, political manipulation, corruption, and fraud.

Why Was the Department of Housing and Urban Development (HUD) Created?

HUD was created as the federal agency to address the country’s housing needs, improve the nation’s communities, and enforce fair housing laws.

What Does the HUD Secretary Do?

The HUD Secretary’s primary duties include advising the president on housing-related issues, making policies, appointing assistant secretaries, and coordinating the efforts of HUD.

What Is a HUD Home?

HUD homes are simply foreclosed properties that the government has put up for sale or auction. HUD homes were originally purchased with FHA loans.

How Do I Find a HUD Home?

First, read HUD’s section on how to buy a HUD home. Then, take a look at the listings of available HUD homes.

The Bottom Line

As with all government departments, HUD has supporters who think its resources are being well spent and its programs are effective—and it has detractors who think its resources are misallocated and its programs are unnecessary at best (and harmful at worst).

There are real-life examples of people who have been helped and people who have been harmed by its rules and programs. Ultimately, it is difficult to assign blame or praise to just one entity when so many factors affect housing in the U.S.

These 3 temporary programs provided extra benefits, including $600 more per week

Fact checked by Vikki Velasquez
Reviewed by Caitlin Clarke

More than 10 million Americans applied for unemployment benefits in March 2020—some 6.6 million of them in the week ending March 28 alone. In April 2020, the unemployment rate soared to 14.7%, “the highest rate and the largest over-the-month increase in the history of the data (available back to January 1948),” according to the U.S. Bureau of Labor Statistics. “The number of unemployed persons rose by 15.9 million to 23.1 million in April.”

Here’s a look at the Federal pandemic unemployment plans put in place and how they worked.

Key Takeaways

• The Coronavirus Aid, Relief, and Economic Security (CARES) Act expanded unemployment insurance benefits to many workers affected by COVID-19, the illness caused by coronavirus, through three key programs.
• The Federal Pandemic Unemployment Compensation (FPUC) program provided an extra $600 weekly benefit on top of your regular unemployment insurance (UI) if you couldn’t work due to COVID-19.
• The Pandemic Unemployment Assistance (PUA) program expanded UI eligibility to self-employed workers, freelancers, independent contractors, and part-time workers impacted by the coronavirus pandemic.
• The Pandemic Emergency Unemployment Compensation (PEUC) program extended UI benefits for an extra 13 weeks.
• Most states recommended applying for UI benefits online.

Overview of Federal Pandemic Unemployment Programs

To put the numbers above into perspective, the unemployment rate hit 10% just once during the Great Recession of 2008, the last major financial crisis to grip the United States. The numbers were the most dire since the Great Depression.

Millions of out-of-work Americans depended on unemployment insurance to help cover rent, groceries, and other expenses. Several new programs were created to help alleviate some of the economic pain caused by COVID-19, thanks to a $2 trillion coronavirus emergency stimulus package called the Coronavirus Aid, Relief, and Economic Security (CARES) Act that then-President Donald Trump (during his first term) signed into law on March 27, 2020.

The CARES Act expanded unemployment insurance benefits to many workers affected by COVID-19 through three key programs: the Federal Pandemic Unemployment Compensation (FPUC) program, the Pandemic Unemployment Assistance (PUA) program, and the Pandemic Emergency Unemployment Compensation (PEUC) program. Here is a look at these programs and how they helped unemployed Americans affected by coronavirus.

Federal Pandemic Unemployment Compensation (FPUC)

The CARES Act established the Federal Pandemic Unemployment Compensation (FPUC) program to boost benefits for out-of-work Americans. Under this new program, eligible people who collected certain unemployment insurance benefits—including regular unemployment compensation—got an extra $600 in federal benefits each week through July 31, 2020. After a series of extensions, the program expired on Sept. 6, 2021. In total, an additional 40 weeks were added to the original 13 weeks of extended benefits.

FPUC was a flat amount given to people who were receiving unemployment insurance, including those who got a partial unemployment benefit check. This program also applied to people who received benefits under the new Pandemic Unemployment Assistance (PUA) program, which covered freelancers, independent contractors, and gig workers (see below).

Important

Under the CARES Act, states that waived their usual one-week waiting period for benefits were fully reimbursed by the federal government for benefits paid that week, plus any associated administrative expenses.

Applying for Federal Pandemic Unemployment Compensation

To apply for Federal Pandemic Unemployment Compensation, people had to file a claim for regular benefits with the UI program in the state where they worked. Depending on the state, they could file a claim in person, online, or over the phone. When they filed a claim, they had to provide their Social Security number, contact information, and details about their former employment.

Under the FPUC program, states administered an extra $600 weekly payment to eligible people who were receiving regular unemployment benefits (including Unemployment Compensation for Federal Employees and Unemployment Compensation for Ex-Servicemembers), as well those collecting benefits from the following programs:

• Pandemic Emergency Unemployment Compensation (PEUC)
• Pandemic Unemployment Assistance (PUA)
• Extended benefits
• Short-Time Compensation
• Trade Readjustment Allowances
• Disaster Unemployment Assistance
• Payment under the Self-Employment Assistance program

Important

Due to the massive number of people trying to apply for UI benefits, many states’ UI websites crashed or were very slow. Applicants were advised to watch for updates on the program website, and to be aware that many states had indicated they would backdate claims to the date when applicants first became unemployed.

As the program launched, most states were still waiting for guidance from the U.S. Department of Labor to implement the program (and the other two programs as well). As states started to provide the extra payment, eligible people received retroactive payments. The payments dated back to the applicant’s eligibility date or the date when their state signed an agreement to provide the benefits—whichever was later. All states had executed agreements with the U.S. Department of Labor as of March 28, 2020.

Important

FPUC, PUA, and PEUC were fully federally funded programs. States also received additional administrative funds to operate these programs.

Pandemic Unemployment Assistance (PUA)

The Pandemic Unemployment Assistance (PUA) program temporarily extended unemployment benefits to eligible self-employed workers, including:

• Freelancers and independent contractors
• Workers seeking part-time work
• Workers who don’t have a long-enough work history to qualify for state unemployment insurance benefits
• Workers who otherwise wouldn’t qualify for benefits under state or federal law

The program expired on Sept. 6, 2021, along with other employment-related programs that provided COVID relief.

Pandemic Unemployment Assistance Eligibility

To be eligible for Pandemic Unemployment Assistance, applicants had to provide self-certification that they were able to work and available for work, and that they were unemployed, partially employed, or unable or unavailable to work due to one of these COVID-19-related situations:

• They have been diagnosed with COVID-19 or have symptoms of it and are trying to get diagnosed
• A member of their household has been diagnosed with COVID-19
• They are providing care for someone diagnosed with COVID-19
• They are providing care for a child or other household member who can’t go to school or work because it’s closed due to COVID-19
• They are quarantined or have been advised by a healthcare provider to self-quarantine
• They were scheduled to start a job and don’t have a job or can’t reach the job due to COVID-19
• They have become the primary earner for a household because the head of household has died as a direct result of COVID-19
• They had to quit their job as a direct result of COVID-19
• Their place of employment has closed as a direct result of COVID-19
• They meet other criteria set forth by the Secretary of Labor

Important

Workers were not eligible for PUA benefits if they could telework with pay. Also, workers had to be authorized to work to be eligible for PUA, so undocumented workers did not qualify.

Benefit amounts were calculated based on previous earnings, using a formula from the Disaster Unemployment Assistance program under the Stafford Act. PUA had a minimum benefit that was equal to 50% of the state’s average weekly UI benefit (about $190 per week).

Since it could take time for states to be ready to process claims for freelancers, gig workers, and independent contractors, workers were eligible for retroactive benefits and could receive benefits for up to 39 weeks, including any weeks when the worker received regular unemployment insurance.

The program started on Jan. 27, 2020, and was set to expire on Dec. 31, 2020, under the CARES Act. It was extended until March 14, 2021, when the Consolidated Appropriations Act was signed into law on Dec. 27, 2020.

PUA was given new life again, adding 29 more weeks to the program after the Biden administration passed the American Rescue Plan Act, a $1.9 trillion stimulus package, in March 2021. PUA officially expired on Sept. 6, 2021, after a total of 79 weeks.

Pandemic Emergency Unemployment Compensation (PEUC)

The Pandemic Emergency Unemployment Compensation (PEUC) program allowed people who had exhausted their regular unemployment benefits to receive up to 13 additional weeks of benefits.

States had to offer flexibility to applicants in meeting PEUC eligibility requirements related to “actively seeking work” if an applicant’s ability to find work was affected by COVID-19. The bill specifies that “a State shall provide flexibility in meeting such [work search] requirements in case of individuals unable to search for work because of COVID-19, including because of illness, quarantine, or movement restriction.”

After a series of extensions, the program also expired on Sept. 6, 2021. In total, an additional 40 weeks were added to the original 13 weeks of extended benefits.

Note

A “non-reduction” rule in the CARES Act prevents states from doing anything to decrease the maximum number of weeks of unemployment insurance or the weekly benefits available under state law as of Jan. 1, 2020.

States Got More Flexibility to Pay Benefits

Federal law allowed considerable flexibility for states to amend their laws to provide unemployment insurance benefits in several COVID-19-related situations. States could, for example, pay benefits when:

•  An employer temporarily closes due to COVID-19, preventing employees from going to work
•  A person is quarantined and anticipates going back to work after the quarantine is over
• A person stops work due to a risk of COVID-19 exposure or infection, to care for a family member, or to homeschool their children

Under federal law, an employee didn’t have to quit to receive benefits due to COVID-19.

To find out the rules in their state, applicants should check with their state’s unemployment insurance program.

Which Pandemic Unemployment Program Covered Freelancers and Part-Time Workers?

The Pandemic Unemployment Assistance (PUA) program covered these categories. Workers had to fit into one of 10 COVID-19-affected categories.

Could People Whose Workplaces Closed Temporarily for COVID Get Unemployment Compensation?

The laws allowed states to include these groups in unemployment compensation. The affected workers didn’t have to lose their jobs to be covered.

When Did These Special Programs End?

All three expired on Sept. 6, 2021.

The Bottom Line

Three special unemployment compensation programs helped workers survive the job loss and financial strain of the coronavirus pandemic in the United States from the end of March 2020 until early September 2021. They included unique features such as covering self-employed workers, freelancers, independent contractors, and part-time workers—and those who left their jobs to care for people affected by COVID-19 or children sent home when schools closed due to the pandemic. They also provided additional payments and a longer time frame for unemployment.