What is the Employee Retention Credit?

The ERTC is a refundable credit that businesses can claim on qualified wages, including certain health insurance costs, paid to employees.

CARES Act – 2020 

For employers who qualify, including borrowers who took a loan under the initial PPP, the credit can be claimed against 50 percent of qualified wages paid, up to $10,000 per employee annually for wages paid between March 13 and Dec. 31, 2020.

Consolidated Appropriations Act – 2021

Employers who qualify, including PPP recipients, can claim a credit against 70% of qualified wages paid. Additionally, the amount of wages that qualifies for the credit is now $10,000 per employee per quarter for the first two quarters of 2021.

American Rescue Plan Act – 2021

The credit remains at 70% of qualified wages up to a $10,000 limit per quarter so a maximum of $7,000 per employee per quarter. So, an employer could claim $7,000 per quarter per employee or up to $21,000 for 2021 after the passage of the Infrastructure Investment and Jobs Act changed the end date of the program for most businesses to Sept. 30, 2021. However, Recovery Startup Businesses are still eligible for ERTC through the end of the year. A Recovery Startup Business is one that started after Feb. 15, 2020 and, in general, had an average of $1 million or less in gross receipts. They could be eligible to take a credit of up to $50,000 for the third and fourth quarters of 2021.