Originally enacted in 2020 as a provision of the CARES Act, the Employee Retention Credit (ERC) is a refundable payroll tax credit available to eligible employers who retained employees during the COVID-19 Pandemic, despite encountering economic hardship. This extends to full and or partially suspended business due to government orders, and or businesses that suffered a significant decline in gross receipts.
Through subsequent legislation including the Consolidated Appropriations Act (CAA), the American Rescue Plan Act (ARPA), and the Infrastructure Investment and Jobs Act (IIJA), the ERC was further expanded upon.
Today, under the culmination of these various Acts, an eligible employer can receive a maximum credit amount of $26,000 per eligible employee:
- For tax year 2020, the maximum credit amount is $5,000 per eligible employee.
- For tax year 2021, the maximum credit amount is $21,000 per eligible employee.
Eligible employers who missed out on this opportunity still have time to file for the credit via amended returns. The ERC opportunity includes those employers who have already claimed an SBA-backed Payroll Protection Program (PPP) Loan.
At TCG, we help qualifying businesses take advantage of this federal tax incentive.