March came in with a lion’s share of new legislation. On the 18th, the President signed the Hiring Incentives to Restore Employment Act, with the happy acronym “HIRE” Act. Under this law all employers except public entities receive a credit from the United States against the FICA taxes owed by the employer for eligible newly hired employees. FICA taxes amount to 15.7% of an employee’s wages; the employer pays half, and the employee pays half, which is withheld from wages.
For the rest of this year, new hires who were unemployed for at least two months and are not replacements for other employees are eligible for the tax exemption. This provision is intended to prevent employers from firing an employee for no reason other than to hire someone eligible for the tax incentive. Employees who quit or are fired for cause.
Employers who keep the new hires for at least a year are eligible for $1,000 in a retention credit next year.