Employee Retention Credit (ERC) Tax Credits are tax breaks provided by the United States government to eligible employers who kept their employees during the COVID-19 pandemic. The ERC is a Coronavirus Aid, Relief, and Economic Security (CARES) Act component. It has been extended by subsequent legislation, such as the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021.
The ERC is intended to assist businesses in keeping their employees on the payroll during the pandemic’s economic downturn. Eligible employers can claim a tax credit of up to 70% of qualified wages paid to employees, with a quarterly maximum of $7,000 per employee. The credit is available for wages paid between March 13, 2020, and December 31, 2020. To be eligible for the ERC, an employer must have experienced a significant decrease in gross receipts or be fully or partially suspended as a result of government orders related to COVID-19. Businesses of all sizes, including tax-exempt organizations, are eligible for the credit. In summary, the Employee Retention Credit (ERC) Tax Credit is a valuable tax benefit the United States government provided to eligible employers who kept their employees on payroll during the pandemic. The credit can assist businesses in offsetting the costs of retaining employees and staying afloat during these difficult times.
