The Employee Retention Credit (ERC) is a tax credit offered by the IRS to assist small businesses in retaining their employees during challenging economic conditions.
The Employee Retention Credit (ERC) provided by the CARES Act is a tax credit that can be fully refunded. In 2020, eligible employers can receive a credit of 50% for the wages they pay to their employees, including allocable qualified health plan expenses. This credit applies to wages paid between March 12, 2020 and January 1, 2021. Each employee’s wages that are taken into account for the credit are limited to $10,000 per calendar quarter, resulting in a maximum credit of $5,000 per employee for the year.
In 2021, the credit percentage has been increased to 70%, and the limit is still $10,000 per quarter per employee. This means the maximum credit for an employee for the year is $26,000.
- Internal Revenue Service (IRS)
- The CARES Act
- U.S. Department of Labor
- FAQs: Employee Retention Credit under the CARES Act
Internal Revenue Service (IRS)
- What Is The Employee Retention Credit (ERC), And How Does The Program Work?