Employee Retention Credit (ERC) — Tax Deduction Guide 2026
Refundable credit of up to $7,000 per employee per quarter for eligible employers who retained workers during the COVID-19 pandemic (2020-2021 only).
Eligibility
Employers who retained employees during COVID-19 pandemic (2020-2021 only)
Tax Savings Calculator
Estimated Tax Savings
$5,000
Tax credits reduce your tax bill dollar-for-dollar.
Savings by Tax Bracket
Requirements
- 1Business operations suspended by government order, or
- 2Significant decline in gross receipts
- 3Available for Q1-Q3 2021 wages only
- 4Cannot double-dip with PPP forgiven wages
Common Mistakes to Avoid
- !Filing fraudulent or inflated claims (IRS moratorium active)
- !Using ERC mill promoters with aggressive claims
- !Not accounting for PPP overlap restrictions
Required Tax Forms
Calculate Your Full Tax Savings
Use our free tax calculators to optimize your entire tax return.
Frequently Asked Questions
What is the Employee Retention Credit (ERC)?
Refundable credit of up to $7,000 per employee per quarter for eligible employers who retained workers during the COVID-19 pandemic (2020-2021 only).
Who is eligible for the Employee Retention Credit (ERC)?
Employers who retained employees during COVID-19 pandemic (2020-2021 only)
How much can I save with the Employee Retention Credit (ERC)?
The average tax savings is $5,000 per year. The maximum deduction is $7,000. Your actual savings depend on your tax bracket and qualifying amount.
What forms do I need for the Employee Retention Credit (ERC)?
You'll need to file Form 941-X and Form 7200 to claim this credit.
What are common mistakes with the Employee Retention Credit (ERC)?
Common mistakes include: Filing fraudulent or inflated claims (IRS moratorium active); Using ERC mill promoters with aggressive claims; Not accounting for PPP overlap restrictions. Always double-check requirements before filing.
Is the Employee Retention Credit (ERC) worth claiming?
With average savings of $5,000, the employee retention credit (erc) is highly valuable. Make sure you meet all eligibility requirements.