President Obama’s proposal has some major implications — tax and otherwise — for business.

Here’s a look at three major points in the president’s American Jobs Act and four related measures:

• Equipment deduction. Businesses would get a one-year extension of the tax break that allows a full dollar-for-dollar deduction for all equipment purchases.
• Payroll tax cuts. All businesses with annual payrolls up to $5 million would see the payroll tax cut in half, from 6.2% to 3.1%. Plus, business would get a payroll-tax holiday on wages paid to new hires.
• Employer tax credits. Businesses that hire an applicant who’s been out of work at least six months will get a tax credit of up to $4,000 per hire.

In addition to those three, the president has proposed:

• raising $105 billion plus private-sector money to go toward infrastructure projects, such as modernizing roads, bridges and schools
• providing $35 billion to local governments to prevent layoffs of teachers and emergency personnel
• cutting the employee portion of payroll taxes – on earnings up to $106,800 — from 6.2% to 4.2% for all of 2011 and a further cut to 3.1% in 2012, and
• spending $45 billion to extend unemployment benefits and provide job training to the long-term unemployed.

Sources: Associated Press, Congressional Record, New York Times.

By now, just about everyone knows about the HIRE Act, or what’s known as “the jobs bill,” and the benefits of taking on new employees. There’s a bit more to it than meets the eye, however, and understanding the fine details — and avoiding mistakes — can make a big difference for employers.

First, the basics of the Act:

• Qualifying hires must occur after February 3, 2010, and before January 1, 2011.
• For qualified hires, employers will receive a 6.2% payroll tax incentive, in effect exempting them from their share of Social Security taxes on wages paid to these workers after the date of enactment.
• For each qualified hire retained for at least a year, employers can claim an additional general business tax credit, up to $1,000 per worker, when they file their 2011 income tax returns.

Those are the benefits. Here’s what you and your HR department have to watch out for:

Anyone you hire must have been unemployed for at least 60 days. Those individuals must be able to certify “by signed affidavit” and under penalty of perjury, that they “have not been employed more than 40 hours in the 60-day period ending on the date such individual gains such employment.”

• You cannot take the credit if the individual is hired to replace a person who is terminated, “unless such other person is separated from employment voluntarily or for cause.”
• There’s a wage rule you have to meet to qualify for the $1,000 tax credit for keeping the person on for at least 52 weeks: Wages paid in the last 26 weeks must equal at least 80% of wages paid in the first 26 weeks. This is the credit that can be taken on an employer’s income tax return filed in 2011.
• This reduced tax withholding will have no effect on the employee’s future Social Security benefits, and employers would still need to withhold the employee’s 6.2% share of Social Security taxes, as well as income taxes. The employer and employee’s shares of Medicare taxes would also still apply to these wages.

Something to discuss with your accountant: Another part of the bill encourages investment by extending the Section 179 depreciation deduction at its 2008/2009 higher amount of $250,000 with a phase-out when expenditures hit $800,000. The higher level deduction expired at the end of 2009, pending further action by Congress.

Actually, there are two differences that set the new plan apart from others like it:

1. It has bipartisan support in the U.S. Senate. The plan is being championed by the partnership of Democrat Charles Schumer and Republican Orrin Hatch — two names you’re unlikely to see linked to any other piece of legislation.
2. It’s quick and simple. Most other plans involve complicated schemes in which businesses would have to wait for a tax credit or deduction.

Here’s how the Hatch/Schumer plan would work:

• If, this year, you hire someone who has been unemployed for at least 60 days, you’ll receive an immediate exemption from paying the 6.2% Social Security payroll tax on that person’s salary. No waiting for a credit or deduction; the exemption starts the day you hire the person. The exemption is prorated for the year. So, for instance, you’d save more by hiring someone now than if you waited. That’s an obvious incentive to kickstart employment.
• There’s no limit on the exemption. You’d receive it for every eligible person you hired in 2010.
• You’d get a $1,000 tax credit in 2011 for every eligible person you hired in 2010 and kept on the payroll for at least one year.

Because of the support for and ease of the plan, many Senate observers says the idea has a real chance of passing.