4 Government Programs That Help Small Businesses Hire Employees

by Kathryn Hawkins

1 min read

The U.S. government aims to stimulate the economy — and chip away at the 9 percent unemployment rate — by offering tax cuts and other incentives to businesses that help create jobs. If you’re looking to add staff but don’t have the revenue stream to do so, the feds (and, in some cases, selected states) may be willing to assist you in hiring and training personnel. Here are four programs that help small businesses bring on new employees.

  1. The Work Opportunity Tax Credit. Available through the Department of Labor, the Work Opportunity Tax Credit reduces the federal income-tax liability of employers who hire workers with “barriers to employment,” including veterans, former prisoners, and people who’ve received welfare or food stamps for a significant amount of time. Employers who hire WOTC-eligible personnel can deduct 25 percent of employee wages from the business’s taxable income for those who work between 120 and 400 hours per year, and 40 percent for those who work 400 hours or more.
  2. The HIRE Act. The HIRE Act, enacted in March 2010, provides tax breaks to employers who hire workers who’ve been unemployed or working part-time for at least two months. Employers who hire eligible staff can claim a tax exemption for the 6.2 percent payroll tax per qualified worker. They may also claim an additional $1,000 credit for each qualified worker they’ve employed for at least a year.
  3. Enterprise Zone Incentives. If your business is located in an economically depressed area, you’ll be eligible for tax breaks for starting and expanding your business there. Enterprise Zone regulations vary from state to state, but you’ll generally be allowed to deduct a percentage of many types of expenses, such as a vacant-building rehabilitation credit and a job-training tax credit. Visit your state government’s website and search for “enterprise zone” to find out which regions qualify and what tax breaks are available.
  4. State Workforce Training Funds. Workforce training grants are available in some states to encourage employers to train unskilled workers and keep jobs within the region. For example, Massachusetts provides grants of up to $250,000 for training current and new employees, and Texas offers up to $500,000 for businesses that partner with local colleges to train workers. Visit your state’s economic development agency website to find out what local programs are available.

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