The Consolidated Appropriations Act, 2021 Extends and Expands Eligibility for Employee Retention Tax Credit

The Consolidated Appropriations Act, 2021 (the Act), signed into law in December 2020, extends and expands the employee retention tax credit originally enacted in the Coronavirus Aid, Relief, and Economic Security Act (CARES Act).

CARES Act Provisions

The CARES Act permitted certain employers that are subject to a full or partial closure order due to COVID-19, or that experience a significant decline in gross receipts, to take a tax credit for certain wages paid to its employees. The credit is equal to 50 percent of qualified wages paid to employees after March 12, 2020, and before January 1, 2021, up to $10,000 in wages for each employee for all calendar quarters during this period. The maximum credit for eligible wages paid to any employee during this period was $5,000.

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