Sen. Majority Leader Harry Reid (D-NV) has introduced a bill that would give small businesses a 10% payroll tax credit for hiring new employees and extend bonus depreciation on new equipment for one year. Under the terms of the Small Business Jobs and Tax Relief Act (S. 2237), small businesses would receive the credit for either hiring new employees in 2012 or for increasing wages. Specifically, qualified employers would receive a credit equal to 10% of the difference between the wages and compensation paid during 2012 over what they paid in 2011, up to $5 million.

The bill would also allow employers to write off the entire cost of new equipment purchases instead of having to depreciate the cost over several years. The measure would extend this 100% bonus depreciation an additional year. The allowance for 100% bonus depreciation was a temporary measure that expired at the end of 2011.

Provisions extending 100% bonus depreciation and offering tax credits for expanding payroll were included in Reid’s American Jobs Act, a more expansive jobs measure that failed to advance in the Senate last October. The Small Business Jobs and Tax Relief Act has been placed on the Senate calendar.