Employer tax breaks available for certain 2010 hires
Washington—Employers are eligible to receive “billions in tax exemptions and credits” for hiring an estimated 8.1 million new employees who had been unemployed for at least 60 days, the Treasury Department said in a report on the 2010 HIRE Act.
Nearly 10 percent of the exemption-eligible new hires were formerly or newly employed in educational and health services.
Under the Hiring Incentives to Restore Employment Act, wages paid to qualifying employees hired from Feb. 4 to Dec. 31 are exempt from the employer’s 6.2 percent share of Social Security payroll taxes for the remainder of 2010. The HIRE Act also allows employers to claim a tax credit for each newly hired qualifying employee who is retained for one year.
Treasury’s Oct. 8 report, Updated Estimates of Newly Hired Employees Eligible for the HIRE Act Tax Exemption HIRE Act Report, includes state-by-state estimates of eligible hires.
“Targeted programs like the HIRE Act tax credit provide an incentive for private-sector employers to hire new workers sooner than they otherwise would,” said Alan B. Krueger, Treasury assistant secretary for economic policy and chief economist. “Since it’s only in effect through the end of the year, the HIRE Act encourages businesses to accelerate hiring in order to get the maximum benefit from this temporary tax credit.”
Employers can claim the HIRE Act tax exemption for all wages paid to qualifying employees. Treasury’s office of economic policy is providing monthly estimates of the number of newly hired employees whose employers potentially qualify for the tax incentives.
The IRS offers more information at employers. Comprehensive data on HIRE Act use will not be available until after employers file tax returns in 2011.