New HIRE Act Extends Section 179 Business Tax Deduction and Provides New Hire Tax Incentives

The new Hiring Incentives to Restore Employment (HIRE) Act extends the Section 179 deduction of $250,000 for the 2010 tax year. Businesses can now deduct up to $250,000 of the cost of qualified property during the 2010 tax year, subject to a phase-out for capital expenditures over $800,000. Without this new legislation, the Section 179 deduction would have been reduced to $133,000 in 2010. The 50% bonus depreciation that was available in the 2009 tax year was not extended but an extension is still under consideration.

The HIRE Act created two other tax breaks for small businesses for the 2010 tax year -- a payroll tax credit on Social Security taxes owed by businesses for qualifying new hires and a business tax credit of $1,000 per eligible new hire. For more information on the HIRE Act tax incentives for small businesses, see New Tax Benefits for Small Businesses Under the HIRE Act in Nolo's Small Business Legal Blog.