UPDATE 12.28.20: Congress passed legislation Dec. 21, 2020 that was signed by the president Dec. 27 extending the employee retention tax credit through July 31, 2021.

That legislation also extends other tax credits, including reimbursing employers for paid sick and family leave benefits paid to employees due to COVID-19 through March 31, 2021.

The federal Coronavirus Aid, Relief, and Economic Security Act created an employee retention tax credit for employers impacted by the COVID-19 pandemic.

The refundable credit represents 50% of up to $10,000 in wages paid by an eligible employer whose business is financially impacted by COVID-19.

The refundable tax credit is available to all employers regardless of size, including tax-exempt organizations, with two exceptions—state and local governments and employers that accept small business loans.

The U.S. Chamber of Commerce issued this guide to help employers understand the program.