The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) is a massive stimulus package that became law on March 27, 2020. In total, the bill provides roughly $2 trillion, making it the largest economic stimulus bill in U.S. history. One noteworthy provision for small businesses involves a refundable employment tax credit for employers, known as the Employee Retention Credit (ERC). This credit is available to qualifying businesses that are experiencing a severe downturn in business, or that must suspend operations entirely under state and local public health orders.
Employee Retention Credit
Section 2301 of the CARES Act establishes the ERC. This tax credit is available for wages paid between March 12, 2020 and January 1, 2021.
Amount of Wages
Employers may take the credit against the Social Security portion of payroll taxes in an amount equal to fifty percent of wages, up to a maximum of $10,000 per employee. The maximum tax credit is therefore $5,000 per employee. If an employer ordinarily pays an employee $1,500 per week, the available tax credit for that week is $750.