Year-end funding bill amendments to the employee retention credit

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January 2021

Overview

Congress on December 21 approved a $2.4 trillion legislative package (the Consolidated Appropriations Act, 2021, or ‘the Appropriations Act’) to fund the federal government through the end of the fiscal year and provide further COVID-19 economic relief, including expanding and extending the CARES Act employee retention credit (ERC).  President Trump signed the package into law on December 27.

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The takeaway

The Appropriations Act makes significant retroactive and prospective changes to the ERC designed to help employers that have been financially impacted by the pandemic.  Based on the changes, more employers now should be eligible for the credit, and the amount of the credit will increase from a maximum of $5,000 per employee in 2020 to $14,000 per employee in 2021.  The credit will be available to be claimed against payroll taxes, and employers with fewer than 500 employees will be able to claim an advance of the credit. 

For additional information on the ERC, the Appropriations Act, and the CARES Act, see:

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Kevin Brown

Principal, Tax Controversy and Regulatory Services Leader, PwC US

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