The $18 billion job creation package, the Hiring Incentives to Restore Employment Act (HIRE), was designed to provide incentives for hiring and retaining workers. The Act also gives a one year extension of enhanced Code Sec. 179 expensing.
The main focus of the bill is $13 billion in tax breaks for private sector businesses to boost hiring of unemployed workers in 2010. The “Hire Now Tax Cut” combines payroll forgiveness for Social Security taxes paid on qualified new hires, along with a tax credit for keeping those workers on the payroll for at least 52 consecutive weeks.
Under the HIRE Act, The bill’s payroll tax forgiveness measure effectively exempts employers from paying the 6.2 percent OASDI Social Security tax liability on wages paid to qualified new hires for any 2010 period starting after March 18, 2010 through December 31, 2010. Based on the FICA wage cap of $106,800, the maximum value of the incentive is $6,621 for any qualified employee. A “qualified employee” must start work anytime after February 3, 2010 and before January 1, 2011, and must not have been employed for more than 40 hours during the 60 day period before his or her start date. Employees who are related to the employer or who directly or indirectly own more than 50 percent of the business are not eligible.
Employers that hire new workers who qualify for payroll tax forgiveness and keep them on the payroll for at least 52 consecutive weeks may be eligible for a tax credit for each of those qualifying employees. The credit is the lesser of $1,000 or 6.2 percent of wages paid by the taxpayer to the qualified retained worker during a 52 consecutive week period.
The HIRE Act also extends the Code Sec. 179 expensing up to $250,000 through December 31, 2010. The phase-out limit for qualifying purchases will also remain at $800,000. Code Sec. 179 expensing is available on both new and used property. Under the HIRE Act, off-the-shelf computer software continues to be Code Sec. 179 property for one more year.
This bill aims to promote a strong, dynamic private sector that encourages job growth. It is a forward-step in addressing the problem of high unemployment.
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