Get paid back for 

KEEPING EMPLOYEES

Keep employees on the payroll with the Employee Retention Credit

Did you know that in 2021 there are bigger and better tax incentives for small businesses affected by COVID-related 

shutdowns and disruptions? The Biden-Harris Administration has made these benefits available NOW – these 

credits can hit your bottom line cash flow as soon as your next quarterly filing and are available for all four quarters 

of 2021.

These credits may deliver cash flow for your business as soon as you claim them. You can file for this credit for 

every quarter of 2021 on your form 941 filing and may also receive an advance payment of a portion of the credit.

THE

D

EPARTMENT OF THE TREASURY

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Find out more about the BidenHarris Administration’s 

recovery programs at 

TREASURY.GOV/CORONAVIRUS

Please note that discussion in this document simplifies 

the ERC eligibility rules. Business owners should consult 

with their tax advisors regarding specifics of eligibility.

Get paid back for keeping 

employees on payroll

If your business:

Employee Retention Credit

• Has 500 or fewer employees;

• Was at least partly closed due to a government order OR

the business’s revenue declined by 20% or more for any

quarter this year; AND

• You kept employees on the payroll:

You may be eligible for 2021 employee retention tax

credits of up to $28,000 per employee. And the longer

you keep your employees on payroll, the more benefits

you are eligible to receive.

For 2021, the employee retention credit (ERC) is a

quarterly tax credit against the employer’s share of

certain payroll taxes. The tax credit is 70% of the first

$10,000 in wages per employee in each quarter of 2021.

That means this credit is worth up to $7,000 per quarter

and up to $28,000 per year, for each employee. If the

amount of the tax credit for an employer is more than the

amount of the employer’s share of those payroll taxes

owed for a given quarter, the excess is refunded – paid –

directly to them.

To see whether your business is eligible for 

the ERC for a given quarter, start by 

determining whether: 

(1) your business was fully or partially shut 

down due to a governmental order during 

any part of the quarter, or (2) the business’s 

gross receipts in a quarter declined more 

than 20% compared to either (a) the same 

quarter in 2019 or (b) the immediately 

preceding quarter in 2020 or 2021.

If the answer to either question is YES, and 

the business had 500 or fewer employees, 

then any wages paid in the quarter may 

count towards the $10,000 per employee 

amount. 

Businesses that received PPP loans in 2020 

or 2021 can still claim the ERC. While 

wages used to apply for PPP loan 

forgiveness cannot also be claimed as ERC 

wages, remaining wages may be eligible for 

the credit.

The ERC is also available for the last two 

quarters of 2021 for certain small 

businesses that opened after February 15, 

2020. These businesses, if they have less 

than $1 million in annual gross receipts, 

may claim ERCs of up to $50,000 per 

quarter, even if the businesses have not 

been shut down or experienced declines in 

revenue.