Tax Incentives for Veterans

Federal Tax Credits for Hiring Veterans

Receive a Tax Credit of up to $9600 for Every Eligible Veteran Hired

There are some little-known, but lucrative tax breaks that your company may receive if they hire certain qualified veterans. For example, these benefits are $2,400 in Federal and $31,000 in state of California tax credits if a company hires a qualified veteran.

Tax credits are a direct, dollar-for-dollar reduction in a company’s tax bill. One way to think of these credits is a reduction in the effective wage cost for an employee.

So, if at the end of the year, a company owes the government $10,000 in tax liability. By generating tax credits, it can wipe out a company’s tax liability dollar-by-dollar! Also, unused credits can be carried forward to later years. Below are some of the tax incentives that are in place.

Returning Heroes Tax Credit

  • Short-term Unemployed: A credit of 40% of the first $6,000 of wages (up to $2,400) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for at least 4 weeks or who have received assistance from a supplemental nutrition assistance program under the Food and Nutrition Act of 2008 for at least a three-month period during the 15-month period ending on the hiring date
  • Long-term Unemployed: A credit of 40% of the first $14,000 of wages (up to $5,600) for employers who hire veterans who have been in receipt of unemployment insurance or compensation for longer than 6 months (whether or not consecutive) in the one-year period ending on the hiring date.

Wounded Warrior Tax Credit

  • Veterans with Services-Connected Disabilities: Veterans with service-connected disabilities hired within one year of being discharged from the military. The credit is 40% of the first $12,000 of wages (up to $4,800).
  • Long-Term Unemployed Veterans with Services-Connected Disabilities: A credit of 40% of the first $24,000 of wages (up to $9,600) for firms that hire veterans with service-connected disabilities who have been in receipt of unemployment insurance or compensation for longer than 6 months.

Differential Wage Payment Credit

  • A credit of up to $4,000 for employers who pay Reserve and National Guard employees while they are away on active duty for more than 30 days and have been employed for more than 90 days. Formerly available only to small businesses in 2015, it is now permanently available to all employers.