CONTINUEThis site uses cookies. By continuing to browse this site you are agreeing to our use of cookies. Find out more.
  1. Front Page
  2. News By Topic
  3. US Treasury Reports On HIRE Act Tax Credits

US Treasury Reports On HIRE Act Tax Credits

by Mike Godfrey, Tax-News.com, Hong Kong

12 October 2010


The United States Department of the Treasury has released an updated report on the number of newly-hired workers who are eligible for tax credits under the Hiring Incentives to Restore Employment (HIRE) Act, passed in March this year.

The HIRE Act offers an exemption from Social Security payroll taxes for every worker hired after February 3, 2010, and before January 1, 2011, who has been unemployed for 60 days or longer. The maximum value of the credit is equal to 6.2% of wages up to USD106,800, which is the Federal Insurance Contributions Act wage cap. There is also an additional USD1,000 income tax credit for every new employee retained for 52 weeks, to be taken on the employer’s 2011 income tax return.

Comprehensive data from the Internal Revenue Service on the use of the HIRE Act will not be available until after employers file tax returns in 2011. In the interim, the Treasury Department’s Office of Economic Policy has, however, provided estimates of the number of newly-hired workers whose employers potentially qualify for the HIRE Act tax exemption.

The report shows that from February to August 2010, businesses have hired an estimated 8.1m new workers who had been unemployed for 60 days or longer, making those businesses eligible to receive the HIRE Act tax exemptions and credits for hiring long-term unemployed workers.

Newly hired workers whose employers are eligible for the HIRE Act payroll tax exemption constitute 11.7% of all workers who were unemployed for eight weeks or longer since the law took effect in February 2010. In other words, about one in eight workers who have been unemployed for eight weeks or longer are hired in the subsequent month.

The Treasury's report contains new state-by-state estimates of the number of eligible hires under the HIRE Act. Many states hit with high unemployment rates have large numbers of potentially eligible new hires, including California with more than 1.1m, Ohio with nearly 350,000, and Michigan with more than 260,000.

The updated report also includes data on the industries in which the newly hired workers were employed prior to their period of unemployment and the industries in which these workers found jobs. So far, about one fifth of newly hired exemption-eligible workers were previously employed in the construction industry. Similarly, employers in the construction industry have hired the largest share of exemption-eligible workers since February 2010.

"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, Assistant Secretary for Economic Policy and Chief Economist at the Treasury Department. "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."

TAGS: individuals | tax | economics | business | law | corporation tax | payroll | tax credits | unemployment | legislation | United States | construction

To see today's news, click here.

 















Tax-News Reviews

Cyprus Review

A review and forecast of Cyprus's international business, legal and investment climate.

Visit Cyprus Review »

Malta Review

A review and forecast of Malta's international business, legal and investment climate.

Visit Malta Review »

Jersey Review

A review and forecast of Jersey's international business, legal and investment climate.

Visit Jersey Review »

Budget Review

A review of the latest budget news and government financial statements from around the world.

Visit Budget Review »



Stay Updated

Please enter your email address to join the Tax-News.com mailing list. View previous newsletters.

By subscribing to our newsletter service, you agree to our Terms and Conditions and Privacy Policy.


To manage your mailing list preferences, please click here »