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The HIRE Act…what’s in it for you?

If you are unemployed, raise your hand.  All fifteen million of you.  Now sigh a giant sigh of relief.  The U.S. Congress and President Obama have passed a new law to encourage employers to hire you.  The tentative pace towards stability just turned into a bit of a skip as the law was signed into effect on March 18th, 2010.  Why all the excitement?  The new jobs creation bill, Hiring Incentives to Restore Employment Act (HIRE) entices employers to hire people immediately in order to benefit from three valuable tax breaks:

  • Employers Get a Payroll Tax Holiday for New Hires — Plus a Potential Tax Credit Bonus.
  • The Super Deduction for Purchasing Business Equipment Has Been Extended.
  • Tax Credit Bonds Are Made More Attractive

What does this mean for those who qualify? The law exempts employers from paying the 6.2 percent Social Security payroll tax through December 2010 on the wages paid to each new employee they hire in 2010 who has been unemployed for at least 60 days. The maximum value is $6,621 per eligible new employee.  The potential tax credit bonus gives employers an additional $1,000 income tax credit for each of these new employees who stay on the job for 52 weeks.

Section 179 of the Internal Revenue Code involving deductions for qualified business assets is being enhanced and is being referred to as a “super deduction”.  Section 179 of the Internal Revenue Code allows an employer to “expense,” or deduct, qualified business assets that were put into service during the year, up to a specified maximum. The modification is being dubbed as “super” because rather than equipment depreciating in value over the course of several years, a business may be able to simply write off the entire cost in one year if you qualify and make this election.  Certainly sounds super to us!

Tax credit bonds are also getting a bit of a makeover with this new law.  The program known as “Build America Bonds” is being reinforced to gain momentum and participation.  The HIRE Act allows issuers of qualified tax credit bonds to receive direct payment from the federal government in an amount equal to the allowable tax credit.  Additionally, the tax credit bonds include new qualified academy bonds, energy conservation bonds, qualified school construction bonds, and renewable energy bonds.

As the seasons change, the landscaping is not the only thing becoming brighter.  The HIRE Act is the first of hopefully many legislative measures the government will be implementing in order to accelerate the rate at which our country is recovering economically.  In the spirit of opportunism, we are remaining as hopeful as ever concerning the advantages of this new legislation.  To learn more about what your business may qualify for under these new tax laws please contact us and we will be happy to address any questions or concerns you may have.