Obama: Small Business Tax Credit 2010?

This morning, President Obama unveiled a temporary tax credit to encourage the hiring of new employees. The initiative is more generous than earlier versions of the tax credit that have floated around Washington, and it's tailored more specifically for small businesses.
Can you please explain to me the details of the Small Business Tax Credit 2010?

asked by Lawrence in Politics | 2649 views | 01-29-2010 at 10:44 PM

Let me explain the Small Business Tax Credit 2010.
A firm that hires a new employee in 2010 would get up to a $5,000 credit against its income tax.

A company that hands out raises above the inflation rate in 2010 would get an income tax credit equal to the additional Social Security taxes it would pay on the increase. Although effectively similar to a payroll tax holiday for an employer, as an income tax credit, the raise incentive would not actually reduce payments to the Social Security trust fund.

This credit would be retroactive to the beginning of the calendar year and could be received on a quarterly basis, if the business so chooses.

From whitehouse.org:

Through the Small Business Jobs and Wages Tax Cut:

* Businesses will receive a $5,000 tax credit for every net new employee that they employ in 2010. The total amount of the credit for any one firm will be capped at $500,000, to ensure that the majority of the benefit is targeted at small businesses. Start –ups will be eligible for half of the tax credit.
* Small businesses that increase wages or hours for their existing employees will be reimbursed for the Social Security payroll taxes they pay on real increases in their payrolls. This bonus would be based on Social Security payrolls, so it would not apply to wage increases above the current taxable maximum of $106,800.
* Firms will be able to claim the credit on a quarterly basis, which gets money out to businesses quickly and provides and early incentive to hire and increase payrolls.

Read more here:

answered by Susan | 01-29-2010 at 10:48 PM

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