Business Tax Changes in the 2010 HIRE Act

Below you will find an overview of the key tax changes affecting business in the recently enacted Hiring Incentives to Restore Employment (HIRE) Act.

Extension of enhanced small business expensing (Section 179).
The new law gives a one-year lease on life to enhanced expensing rules, which allow qualifying businesses the option to currently deduct the cost of business machinery and equipment, instead of recovering it via depreciation over a number of years. For tax years beginning in 2010,the maximum amount that a business may expense is $250,000, and the expensing election begins to phase out when a business buys more than $800,000 of expensingeligible assets. These dollar limits are the same as those that were in effect for 2008 and 2009.

Payroll tax holiday and up-to-$1,000 credit for employers who hire unemployed
workers.

To help stimulate the hiring of workers by the private sector, the new law exempts any
private sector employer that hires a worker who had been unemployed for at least 60
days from having to pay the employer's 6.2% share of the Social Security payroll tax on
that employee for the remainder of 2010. A company could save a maximum of
$6,621 if it hired an unemployed worker and paid that worker at least$106,800—the
maximum amount of wages subject to Social Security taxes—by the end of the year.
As an additional incentive, for any qualifying worker hired under this initiative
that the employer keeps on payroll for a continuous 52 weeks, the employer is eligible for
an additional non-refundable tax credit of up to $1,000 after the 52-week threshold is
reached, to be taken on their 2011 tax return. In order to be eligible, the employee's pay
in the second 26-week period must be at least 80% of the pay in the first 26-week
period.


Workers hired after the date of introduction of the legislation (Feb. 3, 2010) are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after the date of the new law's enactment receive the exemption for payroll taxes.

To view some additional features of the new hiring hiring incentive, visit www.simonsbitzer.com.