The Employee Retention Credit (ERC) is a refundable federal payroll tax incentive created under the CARES Act to help businesses—especially small and mid‑size employers—retain employees during the COVID‑19 crisis. At IgniteHCM, we view ERC as a strategic lever in workforce management: a powerful tool to optimize employee retention, manage cash flow, and ease financial strain during disruptions.Initially, the ERC offered a 50% credit on up to $10,000 in qualified wages per employee for 2020, translating into a maximum credit of $5,000 per employee IRSKPMG. In 2021, enhancements under subsequent relief laws increased the credit rate to 70% and raised the eligible wage base to $10,000 per employee per quarter, enabling up to $7,000 per employee per quarter PaychexThomson Reuters Tax.Eligibility depends on either a government‑mandated suspension of operations or a significant decline in gross receipts during 2020 or early 2021 Thomson Reuters TaxIRS. Although the credit officially expired on September 30, 2021 (with exceptions for designated “recovery startup businesses”), businesses can still retroactively claim ERC by filing amended tax returns (e.g., Form 941‑X) through April 2025