HIRE Act is Good News for Expanding Businesses

What does the 2010 Hiring Incentives to Restore Employment (HIRE) Act mean for you? The Act provides tax incentives for hiring unemployed individuals and extends certain business deductions. So, for business owners, that is good news.

The #1 highlight of the hiring incentives is payroll tax forgiveness for employers. For every qualified worker hired between February 3, 2010 and January 1, 2011, the employer is exempted from paying the 6.2% Social Security tax for that particular employee. A qualified employee is an individual that was unemployed for at least 60 days prior to their start date. Family members of the employer do not qualify and current employees cannot be replaced unless they leave the job voluntarily or are terminated for cause.

In addition to payroll tax forgiveness, an income tax credit is available for retaining qualified workers. The workers have to meet the same criteria for payroll tax forgiveness to qualify employers for the credit. Employers can take the lesser of $1,000 or 6.2% of the wages paid to the employee during the required 52 week period of employment.

Also, certain business deductions were extended. Namely:

  • Section 179 expensing remains at the $250,000 for the first $800,000 of income limit
  • Research tax credit
  • 15 year depreciable life for qualified leashold improvements
  • Empowerment zone tax incentives
  • Various other tax credits

While a potential tax credit is not the only reason to hire new employees, past employment history should be documented for all 2010 hires so you do not miss out on the 2010 HIRE Act tax incentives.