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. As an additional incentive, the employer is eligible for an additional nonrefundable tax credit of up to $1,000 for any qualifying worker hired under this initiative that is kept on payroll for a continuous 52 weeks. 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 Feb. 3, 2010 are eligible for the payroll tax forgiveness and the retention bonus, but only wages paid after March 18 receive the exemption for payroll taxes. Restrictions do apply, so check the law carefully. For example: these tax breaks do not apply to hiring family members.
Extension of enhanced small business expensing. The new law gives a one year extension on 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 expensing eligible assets. These dollar limits are the same as those that were in effect for 2008 and 2009.