4.02.2010

HIRE Act Provides Incentives for Employers

On March 18, 2010, President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act into law. The HIRE Act affords private sector employers (including not-for-profit agencies and private colleges and universities) a Social Security payroll tax exemption if the employer hires individuals after February 3, 2010 who have been unemployed for at least 60 days. This savings will apply to the eligible employer’s portion of the tax paid between March 18, 2010 and January 1, 2011 and an eligible employer can receive up to $6,622 per qualified worker it hires during the relevant time period. Importantly, there is no limit to the number of qualified workers an employer may hire to take advantage of the HIRE Act. However, eligible workers must attest in writing that they have not been employed for more than 40 hours in the past 60 days.

Employers will also receive a tax credit in the lesser amount of $1,000 or 6.2% of the wages paid if they retain the qualified new employee for at least 52 consecutive weeks. To be eligible for that credit, an employer must pay the qualified new employee, during the second half of that 52-week period, at least 80% of what it paid the employee during the first half of that 52-week period.

The HIRE Act also includes a provision extending the small business “expensing” tax break for another year. This allows small businesses to write off up to $250,000 of certain capital expenditures in lieu of depreciating those costs over time. Without this one-year extension, the deduction would have only been $125,000 with the rest of the costs recovered over time through depreciation.

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