On March 18, 2010 President Obama signed into law the Hiring Incentives to Restore Employment (HIRE) Act of 2010.  This Act provides two new tax incentives for employers who hire and retain unemployed workers:
 
Employers who hire unemployed workers this year (after 2/3/10 and before 1/1/11) may qualify for a 6.2% payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after March 18, 2010.

• This reduced tax withholding will have no effect on the employee's future Social Security benefits, and employers would still need to withhold the employee's 6.2-percent share of Social Security taxes, as well as income taxes
• The employer and employee's shares of Medicare taxes still apply to these wages.

 
It is important to understand that for this incentive to apply, the newly hired employee must have been out of work for 60 days prior to being hired with an allowance for a total of 40 hours work over that period.  The law requires that the employer get a statement from each eligible new hire certifying this fact and the IRS is currently developing a form that can be used to make the required statement.
 
The second tax incentive offered is that for each worker retained for at least a year, businesses may claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.
 
As these tax breaks are meant to raise the employment level, a new hire may not fill an existing position unless that employee left on their own or was fired with cause. Hiring a family member or any relative also doesn't qualify for this break.
 
This law is good news for those in the industry currently out of work and for employers seeing an uptick in business but who are still hesitant about hiring.  These incentives might have come just at the right time - for more information please consult your accountant or attorney.