Obama's Small Business Tax Changes to Date

Employers wanting to take advantage of Obama’s small business tax incentives will want to take action now; as of June 2010, many of the tax breaks have already expired or will soon. Here’s a breakdown of certain small business tax incentives made available under Obama.

Capital Gains Exclusion on Small Business Investments

Passed on June 15, 2010, this bill eliminates capital gains tax on investments in certain small business stocks purchased between March 15, 2010, and January 1, 2012.

 Health Care Tax Credit

The Affordable Care Act tax incentive allows small businesses that have previously not offered health insurance coverage to do so and allows other small businesses to maintain their existing coverage. The credit takes effect in the tax years 2010 to 2013, and the maximum credit is up to 35 percent of premiums paid. Eligible employers with 10 or fewer full-time employers would receive the maximum credit allotted.  

Work Opportunity Tax Credit

The WOTC offers savings on taxes for employers who hire people in one of the 12 targeted groups, which include unemployed veterans, Hurricane Katrina survivors and certain youth workers. Generally, the credit is based on qualified paid wages in the first year of employment. A 25 percent tax credit is given for employees who have worked at least 120 hours, and a 35 percent tax credit exists for employees working over 400 hours. Employees must be hired by small businesses in 2010 to receive this credit.

Payroll Tax Incentive

Under the Hiring Incentives to Restore Employment (HIRE) Act, employers are exempted from paying the 6.2 percent share of Social Security tax paid on wages. This credit can be claimed only for employees hired between February 3, 2010, and January 1, 2011, who were previously unemployed.

 New Hire Retention

In addition to the payroll tax incentive, under the HIRE Act, small business owners could receive a tax credit of up to $1,000 per new worker hired in 2010 who was previously unemployed. To receive the credit, the employee must be retained for at least 52 consecutive weeks. The WOTC credit and the New Hire Retention credit can be claimed for the same employee.