Following the economic recession of 2008-10, the United States government took extraordinary measures to attempt to shore up the national economy. One of the major areas of concern was unemployment. Rising unemployment figures pushed the national unemployment rate up to 10 percent, placing a strain on federal unemployment funds. Even worse, many out-of-work Americans were finding it hard to locate suitable work for months or even years on end, reducing the likelihood they would ever find full-time employment. To encourage businesses to open hiring to these long-term unemployed workers, the federal government enacted the Hiring Incentives to Restore Employment (HIRE) Act.

What was the HIRE Act?

The HIRE Act was a series of tax incentives that were designed to encourage companies to increase hiring of long-term unemployed workers. Those that did received tax breaks for small businesses and payroll tax liabilities. For example, businesses that met the hiring standards of the act received a tax break of $1,000 per new employee. These companies also received a short-term tax break on the amount of Social Security taxes they were required to match for these new hires.

In addition to employment tax breaks, the HIRE Act also increased the amount of one-time depreciation open to small business owners. Rather than being limited to writing off assets of $125,000 or less in one calendar year, companies could depreciate assets that were valued at up to $250,000.

How Did Businesses Qualify for HIRE Provisions?

To qualify for the tax breaks under the HIRE Act, businesses had to hire "qualified employees". These employees were individuals who had been unemployed for at least 60 days prior to hiring or had worked less than 40 hours per week for an employer during this same time. After hiring these unemployed workers, the companies were required to keep them on the payroll for at least 52 weeks in order to claim the tax breaks.

What was the Purpose of the HIRE Act?

The main purpose of the HIRE Act was to incentivize companies that had been hit hard by the recession to invest in additional workers. Since the recession hit corporate profits hard, many companies were reluctant to invest any capital in the cost of hiring workers without a guarantee of continued sales that would sustain the costs of new employees. The increase in available one-time depreciation expenses was intended to encourage companies to invest in new equipment to expand their operations without having to go into debt to purchase them.

Since the HIRE Act was designed a short-term incentive to increase hiring and reduce unemployment numbers, the act was only intended to remain in effect until January 1, 2011, and its benefits are no longer available to companies.

The HIRE Act did encourage some businesses to invest in new workers and federal unemployment numbers began a slow decline that brought the numbers down below its recent records.