New Hire Act Details and Depreciation incentives

President Obama signed the Hiring Incentives to Restore Employment (HIRE) Act. This new $17.5 billion legislation is of particular interest to businesses as it includes new tax benefits directly related to hiring employees and writing off investments in equipment.

The new tax incentives for businesses to hire unemployed workers are:

■payroll tax exemption of the employers share of Social Security taxes on wages paid to these workers after March 18, 2010.
■employer tax credit of up to $1,000 per worker
The new employees must meet these criteria in order to qualify for the business tax credits.
■hired between Feb 3, 2010 & Jan 1, 2011
■newly-hired employee was unemployed during the 60 days prior to starting work, or worked fewer than 40 hours for someone else during the 60 day period
Household employers are not eligible for the new tax benefits.

Business owners that hire qualifying workers sooner rather than later will get the most out of the tax credits, as the tax credits diminish over time, disappearing completely by January 1, 2011.

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Another item of interest in this federal jobs bill is to permit small business owners to write off equipment investments of up to $250,00 this year, instead of taking years to depreciate. This in a doubling of the previous amount of $125,000. This will provide tax incentives for small businesses to grow while stimulating the economy with their investment spend.