“Targeted” is the new stimulus check watchword, helping to define the debate on a third payment for $1,400. The $1,400 amount could send the budget for stimulus checks soaring, especially if each dependent in a household also gets $1,400. For example, a family of four could see a $5,600 stimulus check — but only as long as they’re within the bounds of whatever final income limit lawmakers set. Those who fall outside the target may be disqualified from receiving a check.

That is the question President Joe Biden with Democratic lawmakers are puzzling over: Where to set the upper and lower income limits for a third payment. “We need to target that money. So, folks making $300,000 don’t get any windfall,” President Joe Biden said on Friday about his strategy for a $1.9 trillion stimulus bill, which would include the $1,400 check. “If you’re a family that’s a two-wage earner, each of the parents — one making 30 grand and one making 40 or 50 … Well, yeah, they need the money, and they’re going to get it.”

Behind the momentum to limit recipients is a fairly complex formula based on factors like your yearly income, number of dependents, the equation’s “reduction rate” and arbitrary income limits. Using the previous payment limits, we’ll explain how a $1,400 stimulus check could create that “windfall.” We’ll also look at ways payments could become more targeted, and at how proposed new qualifications could allow millions to either receive a stimulus check for the first time or get more money per household. We continue to update this story.

How the next stimulus check could become ‘targeted’

Some in Congress have embraced a “targeted” stimulus check that would seek to send the payment to lower or middle income households, and exclude upper income people from receiving any check at all, even a partial payment. Among the possibilities, lawmakers could choose to:

• Establish a lower check maximum than $1,400. (Note that Biden has said he’s 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’d get a partial payment.

Not everyone is in favor of a lower income limit. “I strongly oppose lowering income eligibility for direct payments from $75,000 to $50,000 for individuals and $150,000 to $100,000 for couples. In these difficult times, ALL working class people deserve the full $1,400. Last I heard, someone making $55,000 a year is not ‘rich.'” tweeted Sen. Bernie Sanders on Saturday.

Here’s why some people want a $1,400 stimulus check to be ‘targeted’ — and what happens if it isn’t

If the $1,400-per-person stimulus check were to be governed by the exact same formula as the first two payments, people considered high income would get all or part of the maximum payment, in addition to all the people 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 only people who earn less than $50,000 a year as a single taxpayer or $100,000 per year as a married couple would get the full $1,400 and $2,800, respectively. Others would receive a partial payment. (That’s without dependents — here’s how to calculate based on your family situation.)

But without limiting who else would get the payment, the sole act of raising the per-person maximum to $1,400 could authorize checks to people who make “too much money,” based on the current formula.

For example, using our $1,400 stimulus calculator, single taxpayers with an AGI below $75,000 would receive the full $1,400 check. At $85,000, they 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.

Using the same formula, a $600 stimulus maximum gives a single taxpayer with an AGI of $80,000 a stimulus check of $350. A person who makes $86,900 a year would get a check for only $5. The difference between the two comes solely from changing the maximum per-person payment.

The result is that, with the current formula in place with a $1,400 maximum, more people would be eligible overall to receive a stimulus check of some amount, even if it were a relatively small payment. So if lawmakers want to keep the $1,400 per-person maximum but ensure that people who make, for instance, $100,000 a year don’t get the payment, the formula would have to change. It would have to become more “targeted.”

Dependents and spouses add another layer — here’s more information, including a handy comparison chart.

Option 1: A new check could exclude earners over a set yearly income

One way to target a check is to exclude people who make over a certain sum. For example, let’s say the bill were to disqualify single taxpayers who make more than $50,000 per person and couples making $100,000 — full stop. Changes to the formula would start here and work backward until the other parts of the equation fall into place.

In this scenario, here’s what people could get:

• Full stimulus payment: Single people with an AGI less than $40,000; married couples earning less than $80,000.
• Partial payment: Single people making $40,000 to $50,000 a year; married couples with a combined salary between $80,000 and $100,000.
• No payment: Single people who earn $50,000 or more; married couples who make $100,000 or more.

Dependents of any age would count for additional money, which does complicate the issue, but the thrust behind this type of change would be to keep people who make more than the “desired” or “targeted” salary from receiving stimulus money.

Option 2: New rules could lower the number of people receiving the full amount

Another option is to purposely decrease the number of people who receive 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 less than $50,000 are the only ones who’d receive the full amount. People with an AGI of more than that (up to a certain limit) would get a partial payment — which would also peter out more quickly for people with relatively higher incomes. That calculation could potentially mean a little bit of money for middle income earners, but it would still exclude the highest earners from receiving a stimulus check for any quantity.

Far fewer people would receive stimulus money with a formula that phases out starting at $50,000 than one that phases out starting at $75,000.

Option 3: Dropping the per-person maximum could cut payments overall

Let’s say for the sake of argument that a $1,000 stimulus check were adopted instead of $1,400. (This isn’t likely to happen after Biden confirmed he’s dead set on a $1,400 maximum.) 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, single taxpayers — no spouse or kids — could get some amount of stimulus money if they made less than $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, and the second payment reached an estimated 147 million households, despite more groups of people qualifying for the second check. Likewise, a hypothetical $1,000 payment would reach fewer people than a $1,400 stimulus check even if that were the sole change to Biden’s proposal.

Option 4: What happens if the reduction rate changes?

Changing the math in the stimulus check formula used for the first two checks would be an additional way to limit the number of people who receive a check. In this scenario, 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 — the “reduction rate” — could result in people who make more than $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.

But reducing your share by 10% instead of 5% for every $100 in income would mean you’d get less money incrementally for every amount you make over the limit to receive the full payment. In this case, you’d get $10 less per $100 versus $5 less per $100. If you make thousands of dollars more than the upper limit, that difference could add up fast.

Put another way, 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 than they would if this reduction rate didn’t change.

How might 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.