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 theemployer’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

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