New Tax Incentives for Employers Who Hire Veterans

H.R. 674 signed into law on November 21, 2011

H.R. 674 is a large bill that amends the Internal Revenue Code.  It includes new tax credits for businesses that hire unemployed veterans. The law provides nonprofit employers a tax credit of as much as $6,240 for hiring a disabled veteran or a $3,640 credit for any veteran who had been out of work for more than six months. The hiring incentive is 65 percent of the value of the for-profit tax credit. Nonprofits can apply the credit against employer payroll taxes.

Returning Heroes Tax Credit

The Returning Heroes Tax Credit is a new hiring tax credit that will provide an incentive for businesses to hire unemployed veterans.

  • Short-term unemployed: A new credit of 40 percent of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been unemployed at least 4 weeks.
  • Long-term unemployed: A new credit of 40 percent of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been unemployed longer than 6 months.
     

Wounded Warrior Tax Credit

The Wounded Warrior Tax Credit will double the existing tax credit for long-term unemployed veterans with service-connected disabilities. It will also:

  • Maintain the existing Work Opportunity Tax Credit for veterans with service-connected disabilities (currently the maximum is $4,800).
  • Create a new credit of 40 percent of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been unemployed longer than 6 months.

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