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Hiring Incentives to Restore Employment
(HIRE) Act
Last Updated: May 20, 2010
On March 18, 2010, President Obama signed
the Hiring Incentives to Restore Employment
(HIRE) Act, which provides 2 new tax
benefits to certain employers who hire
previously unemployed or under-employed
workers.
A Qualified Employer is generally any
private-sector taxable business or
tax-exempt organization. While most
government entities are excluded, public
institutions of higher education are
eligible for the benefits. Household
employers are not.
Payroll Tax Exemption
The first tax benefit provides an exemption
of the
employer's 6.2% share of the Social
Security tax on the employee's wages paid
between March 19 and December 31, 2010.
Employers receive this benefit immediately,
and the tax savings accrue with each
payroll. There is no cap on this payroll tax
exemption, which would represent a savings
of about $2,800 for a $60,000 per-year
worker hired on April 1, 2010 - obviously
more for a more highly compensated employee.
Keep in mind that the exemption only applies
to the employer's portion of the Social
Security Tax (paid on annual wages up to
$106,800). The employee’s 6.2% share of
Social Security Tax and the employer and
employee’s shares of Medicare tax still
apply to all wages. This tax exemption will
have no effect on the employee’s future
Social Security benefits. For an employee
who is also eligible for the
Work Opportunity Tax Credit, the
employer may only apply for one of the two.
New Hire Retention Credit
In addition to the payroll tax exemption,
for each qualified employee retained for at
least 52 consecutive weeks, the employer
will also be eligible for a general business
tax credit of 6.2% of wages paid to the
qualified employee over the 52-week period
up to a maximum of
$1,000 where wages during the last 26
weeks were at least 80% of the wages paid
for the first 26 weeks. |