The
"Hiring Incentives to Restore Employment Act" (HIRE Act) was
signed into law by President Obama on March 18, 2010. The law includes temporary
tax breaks for businesses that hire workers who have been unemployed
for at least 60 days, and it extends for one year the higher expensing
limit for business equipment purchases.
* HIRING INCENTIVES. The HIRE Act provides $13 billion in tax incentives
to private businesses that hire unemployed workers. Employers can
receive an exemption from social security payroll taxes for every
qualified worker hired after February 3, 2010, and before January
1, 2011. For new hires kept on the payroll for at least 52 weeks,
employers may qualify for a tax credit for each retained worker of
the lesser of $1,000 or 6.2% of wages paid during the
52-week period.
The payroll tax forgiveness provided in the law does not apply to
the Medicare portion of the tax. Also, the new employee cannot
displace a current employee unless that employee quit or was fired
for cause. Relatives of the employer are not
considered qualified employees for these tax breaks.
* INCREASED EXPENSING LIMITS. The 2009 maximum amount that could
be expensed for the purchase of new or used business equipment was
$250,000, with a dollar-for-dollar reduction once total equipment
purchases for the year exceeded $800,000. The expensing limit fell
to $134,000 for 2010, with phase-out set at $530,000. The HIRE Act
retroactively reinstates the higher 2009 expensing limits for
2010. This is a one-year extension only, and it does not include
an extension of bonus depreciation allowed last
year. Off-the-shelf computer software will continue
to qualify for expensing for 2010 purchases.
The HIRE Act does not extend the business and individual tax breaks
that expired at the end of 2009; nor does it extend COBRA premium
assistance. These provisions are addressed in other bills under
consideration by Congress.
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