What Is the Employee Retention Credit (ERC)

The Employee Retention Credit (ERC) program is a tax credit created by the US government in response to the COVID-19 pandemic. The program was designed to encourage businesses to keep their employees on payroll during the pandemic by providing a refundable tax credit to eligible employers.

The ERC program was first introduced in March 2020 as part of the Coronavirus Aid, Relief, and Economic Security (CARES) Act, and it has since been extended and expanded through various pieces of legislation, including the Consolidated Appropriations Act of 2021 and the American Rescue Plan Act of 2021.

Eligible employers can claim the ERC for wages paid to employees from March 12, 2020, through December 31, 2021. The credit is equal to 50% of qualified wages paid to each employee, up to a maximum of $10,000 per employee per calendar quarter. This means that eligible employers can claim up to $7,000 in tax credits per employee per quarter.

To be eligible for the ERC, employers must meet certain criteria, including:

• Experiencing a significant decline in gross receipts or a full or partial suspension of operations due to government orders related to COVID-19
• Having fewer than 500 employees (or meeting certain other criteria for larger employers)
• Continuing to pay employee wages during the eligible period

The ERC program has provided much-needed support to businesses struggling to keep their doors open during the pandemic, and it has helped millions of workers keep their jobs. If you think your business may be eligible for the ERC, it's worth exploring the program and seeing if you can take advantage of this valuable tax credit.