Congress has approved legislation to expand tax incentives to encourage employers to hire military veterans. The Three Percent Withholding Repeal and Job Creation Act (HR 674) was signed by President Obama on November 21, 2012.
The Work Opportunity Tax Credit (WOTC), which was extended by the 2010 Tax Relief Act through 12-31-11, rewards employers with a tax credit for hiring individuals from targeted groups. Targeted groups eligible for the WOTC are:
- Families receiving Temporary Assistance for Needy Families (TANF)
- Qualified veterans (certain veterans receiving food stamps and certain veterans with service-connected disabilities)
- Qualified ex-felons
- Designated community residents
- Vocational rehabilitation referrals
- Qualified summer youth employees
- Qualified food stamp recipients
- Qualified Supplemental Security Income recipients
- Long-term family assistance (TANF) recipients
HR 674 enhances the WOTC by creating the Returning Heroes Tax Credit and the Wounded Warriors Tax Credit which will be available through 12-31-12:
- Employers that hire veterans who have been looking for employment for more than six months may be eligible for Returning Heroes Tax Credit of up to $5,600 per employee; employers that hire veterans who have been looking for employment for less than six months may be eligible for a credit of up to $2,400 per employee.
- Employers that hire veterans with service-connected disabilities who have been looking for employment for more than six months may be eligible for a Wounded Warriors Tax Credit of up to $9,600 per employee.