To amend the Internal Revenue Code of 1986 to allow employers a refundable credit for increasing employment.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Tax Credits for Jobs Now Act of 
2010''.

SEC. 2. CREDIT FOR INCREASING EMPLOYMENT.

    (a) In General.--Subpart C of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to refundable credits) 
is amended by inserting after section 36A the following new section:

``SEC. 36B. CREDIT FOR INCREASING EMPLOYMENT.

    ``(a) In General.--There shall be allowed as a credit against the 
tax imposed by this subtitle--
            ``(1) for any taxable year beginning in 2010, an amount 
        equal to 60 percent of the excess of--
                    ``(A) the aggregate wages paid during 2010, over
                    ``(B) the aggregate wages paid during 2009, and
            ``(2) for any taxable year beginning in 2011, an amount 
        equal to 40 percent of the excess of--
                    ``(A) the aggregate wages paid during 2011, over
                    ``(B) the aggregate inflation-adjusted wages paid 
                during 2010.
    ``(b) Higher Credit for Increased Employment in States With High 
Unemployment.--
            ``(1) In general.--The amount of credit allowable by 
        subsection (a) (without regard to this subsection) shall be 
        increased by--
                    ``(A) 30 percent of the increased high unemployment 
                State wages for any taxable year beginning in 2010, and
                    ``(B) 20 percent of such wages for any taxable year 
                beginning in 2011.
            ``(2) Definitions.--For purposes of this subsection--
                    ``(A) Increased high unemployment state wages.--The 
                term `increased high unemployment State wages' means, 
                with respect to each high unemployment State, the 
                excess which would be determined under subsection (a) 
                for the taxable year (after the application of 
                subsections (e) and (f)) if only wages paid to 
                qualified employees with respect to such State were 
                taken into account.
                    ``(B) Qualified employee.--The term `qualified 
                employee' means, with respect to any State, any 
                employee of an employer if--
                            ``(i) substantially all of the services 
                        performed during the taxable year by such 
                        employee for such employer are performed within 
                        such State in a trade or business of the 
                        employer, and
                            ``(ii) the principal place of abode of such 
                        employee while performing such services is 
                        within such State.
                Rules similar to the rules of paragraphs (2) and (3) of 
                section 1396(d) shall apply for purposes of this 
                subparagraph.
                    ``(C) High unemployment state.--The term `high 
                unemployment State' means any State having an 
                unemployment rate (using the most recent available 
                data) as of the beginning of the taxable year for which 
                the credit is being determined of at least 8.5 percent.
            ``(3) Maximum wages taken into account.--The aggregate 
        increased high unemployment State wages which may be taken into 
        account with respect to all high unemployment States for any 
        taxable year shall not exceed the excess determined under 
        subsection (a) for such year.
    ``(c) Maximum Credit.--The amount of the credit allowable under 
this section for any employer with respect to any calendar year shall 
not exceed $500,000.
    ``(d) Special Rules for Employers Which Are Exempt From Income Tax 
or Which Have Insufficient Income Tax Liability.--
            ``(1) In general.--In the case of an employer to which this 
        subsection applies for any payroll period, the payroll taxes 
        otherwise required to be paid to the Secretary with respect to 
        such payroll period shall be reduced (but not below zero) by 
        such period's proportionate share of the employer's estimated 
        credit under subsection (a) for the taxable year which includes 
        such period.
            ``(2) Employers who which subsection applies.--This 
        subsection shall apply to--
                    ``(A) any employer which is exempt from tax under 
                section 501(a), and
                    ``(B) any employer which estimates that the tax 
                imposed by this subtitle for the taxable year will not 
                exceed the credit allowable under subsection (a) for 
                such year.
            ``(3) Payroll taxes.--For purposes of this subsection, the 
        term `payroll taxes' means--
                    ``(A) amounts required to be deducted and withheld 
                for the payroll period under section 3401 (relating to 
                wage withholding),
                    ``(B) amounts required to be deducted for the 
                payroll period under section 3102 (relating to FICA 
                employee taxes), and
                    ``(C) amounts of the taxes imposed for the payroll 
                period under section 3111 (relating to FICA employer 
                taxes).
            ``(4) Amounts treated as paid to secretary.--The amount of 
        the reduction under paragraph (1) shall be treated as paid to 
        the Secretary on the day such amount would be required to be so 
        paid without regard to this subsection.
            ``(5) Reconciliation.--
                    ``(A) In general.--If there is a reduction under 
                this subsection for 1 or more payroll periods ending 
                during a taxable year, then the tax imposed by this 
                chapter for such taxable year shall be increased by the 
                aggregate amount of such reductions.
                    ``(B) Reconciliation.--Any increase in tax under 
                subparagraph (A) shall not be treated as tax imposed by 
                this chapter for purposes of determining the amount of 
                any credit (other than the credit under subsection (a)) 
                allowable under this part.
    ``(e) Minimum Preceding Year Wages.--For purposes of subsection 
(a)--
            ``(1) the amount taken into account under paragraph (1)(B) 
        thereof shall not be less than 50 percent of the amount 
        described in paragraph (1)(A) thereof, and
            ``(2) the amount taken into account under paragraph (2)(B) 
        thereof shall not be less than 50 percent of the amount 
        described in paragraph (2)(A) thereof.
    ``(f) Total Wages Must Increase.--The amount of credit allowed 
under this section for any taxable year shall not exceed the amount 
which would be so allowed for such year (without regard to subsection 
(e)) if--
            ``(1) the aggregate amounts taken into account as wages 
        were determined without any dollar limitation, and
            ``(2) 103 percent of the amount of wages otherwise required 
        to be taken into account under subsection (a)(1)(B) or 
        subsection (a)(2)(B), as the case may be, were taken into 
        account.
    ``(g) Wages; Inflation-Adjusted Wages.--For purposes of this 
section--
            ``(1) In general.--Except as provided in paragraph (2), the 
        term `wages' has the meaning given to such term by section 
        3306(b).
            ``(2) Railway and agricultural labor.--Rules similar to the 
        rules of section 51(h) shall apply for purposes of this 
        section.
            ``(3) Inflation-adjusted wages.--The term `inflation-
        adjusted wages' means the aggregate wages paid during 2010 
        increased by an amount equal to--
                    ``(A) such aggregate wages, multiplied by
                    ``(B) the cost-of-living adjustment determined 
                under section 1(f)(3) for 2010, determined by 
                substituting `calendar year 2008' for `calendar year 
                1992' in subparagraph (B) thereof.
        Any increase determined under the preceding sentence shall be 
        rounded in such manner as the Secretary shall prescribe.
    ``(h) Special Rules.--
            ``(1) Adjustments for certain acquisitions, etc.--
                    ``(A) Acquisitions.--If, after December 31, 2008, 
                an employer acquires the major portion of a trade or 
                business of another person (hereinafter in this 
                subparagraph referred to as the `predecessor') or the 
                major portion of a separate unit of a trade or business 
                of a predecessor, then, for purposes of applying this 
                section for any calendar year ending after such 
                acquisition, the amount of wages deemed paid by the 
                employer during periods before such acquisition shall 
                be increased by so much of such wages paid by the 
                predecessor with respect to the acquired trade or 
                business as is attributable to the portion of such 
                trade or business acquired by the employer.
                    ``(B) Dispositions.--If, after December 31, 2008--
                            ``(i) an employer disposes of the major 
                        portion of any trade or business of the 
                        employer or the major portion of a separate 
                        unit of a trade or business of the employer in 
                        a transaction to which subparagraph (A) 
                        applies, and
                            ``(ii) the employer furnishes the acquiring 
                        person such information as is necessary for the 
                        application of subparagraph (A),
                then, for purposes of applying this section for any 
                calendar year ending after such disposition, the amount 
                of wages deemed paid by the employer during periods 
                before such disposition shall be decreased by so much 
                of such wages as is attributable to such trade or 
                business or separate unit.
            ``(2) Change in status from self-employed to employee.--
        If--
                    ``(A) during 2009 or 2010 an individual has net 
                earnings from self-employment (as defined in section 
                1402(a)) which are attributable a trade or business, 
                and
                    ``(B) for any portion of the succeeding calendar 
                year such individual is an employee of such trade or 
                business,
        then, for purposes of determining the credit allowable for a 
        taxable year beginning in such succeeding calendar year, the 
        employer's aggregate wages for 2009 or 2010, as the case may 
        be, shall be increased by an amount equal to so much of the net 
        earnings referred to in subparagraph (A) as does not exceed the 
        median household income in the United States for 2009 or 2010, 
        as the case may be.
            ``(3) Certain other rules to apply.--Rules similar to the 
        following rules shall apply for purposes of this section:
                    ``(A) Section 51(f) (relating to remuneration must 
                be for trade or business employment).
                    ``(B) Section 51(1)(1) (relating to related 
                individuals ineligible).
                    ``(C) Section 51(k) (relating to treatment of 
                successor employers; treatment of employees performing 
                services for other persons).
                    ``(D) Section 52 (relating to special rules).
            ``(4) Short taxable years.--If the employer has more than 1 
        taxable year beginning in 2010 or 2011, the credit under this 
        section shall be determined for the employer's last taxable 
        year beginning in 2010 or 2011, as the case may be.
    ``(i) Tax-Exempt Employers Treated as Taxpayers.--Solely for 
purposes of this section and section 6402, employers exempt from tax 
under section 501(a) shall be treated as taxpayers.''.
    (b) Denial of Double Benefit.--Subsection (a) of section 280C of 
such Code is amended by inserting ``36B(a),'' before ``45A(a)''.
    (c) Conforming Amendments.--
            (1) Section 1324(b)(2) of title 31, United States Code, is 
        amended by inserting ``36B,'' after ``36A,''.
            (2) The table of sections for subpart C of part IV of 
        subchapter A of chapter 1 of such Code is amended by inserting 
        after the item relating to section 36A the following new item:

``Sec. 36B. Credit for increasing employment.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2009.

Summary: Tax Credits for Jobs Now Act of 2010 - Amends the Internal Revenue Code allow employers a refundable tax credit for increasing aggregate employee wages paid in 2010 over those paid in 2009, and for increasing aggregate employee wages paid in 2011 over those paid in 2010. Increases the rate of such credit for increasing wage payments in high unemployment states . Limits the annual amount of such credit to $500,000.