Congress Passes the 2010 Hiring Incentives to Restore Employment (HIRE) Act

On March 17, 2010, Congress passed a new "jobs bill" that Pres. Obama is expected to quickly sign.  The HIRE Act provides a "tax holiday" for employers who hire "qualified individuals."  The 6.2% employer portion of the Social Security tax is waived on wages paid after the date of enactment through the end of 2010 to qualifying new hires.  No waiver is available for the employer's 1.45% share of the Medicare tax.  A qualified individual must start work after February 3, 2010 and before January 1, 2011.  Such individual must certify that he or she has not been employed for more than 40 hours during the 60-day period ending on the date of hire.  Many special rules apply, such as the new hire cannot displace a current employee unless the current employee leaves voluntarily or is fired for cause.  In addition to the payroll tax savings, the employer will receive up to $1,000 of tax credits for each qualifying new hire who is employed for at least 52 consecutive weeks.  Again, special rules apply.

The HIRE Act extends the 2009 enhanced levels of business equipment expensing under Code Section 179.  The expensing limit is $250,000, reduced for purchases over $800,000, for purchases made in tax years beginning in 2010.  Previously, those limits would have been $125,000 and $500,000.  Note that the expensing limit is based upon purchases made during "tax years" and not simply calendar year 2010.  The HIRE Act did not extend the 50% bonus depreciation for new equipment purchases that expired on December 31, 2009.