On March 19, President Barack Obama signed into law legislation (H.R. 2847) that creates a tax credit for the hiring of employees.
Under this new law, an employer who hires an employee after February 3, 2010, and before January 1, 2011, can receive a tax credit equal to the employer’s portion of the Social Security tax. All employers, with the exception of government employers, are eligible for this tax credit. Public institutions of higher education are the only government institutions that are eligible for the tax credit.
In order to qualify for this credit, an employer must hire an employee who has not been working for 40 hours per week for the past 60 days. Potential employees are responsible for attesting to their employment status. Taxes already paid by an employer on an eligible employee hired after February 3 but before the bill was signed on March 19 would be allowed to credit the Social Security taxes already paid to second-quarter tax payments. An employer who keeps an employee eligible for this tax credit on his payroll for 52 consecutive weeks will be able to claim an additional tax credit of $1,000 in 2011.
In addition to this tax credit, the new law:
- Allows small businesses to expense up to $250,000 of their taxable income for another year — through the end of 2010;
- Expands eligibility for “Build America Bonds;” and
- Extends surface transportation policy through December, thereby providing $19.5 billion for road construction and other infrastructure projects under the Highway Trust Fund.