Tax Credits for Hiring Veterans in Effect Now
December 8, 2011 : Teresa L. Clark - Corporate Communications
As creators of nearly two out of three jobs, small businesses are viewed as strong drivers of the economy. While two new business tax credits that are part of the American Jobs Act will benefit all businesses, small businesses would likely feel the positive effects the most. These tax credits are the Returning Heroes Tax Credit and the Wounded Warrior Tax Credit, which provide extra incentive to hire someone who is not only unemployed, but also a veteran.
More than 11 percent of veterans who served after September 2001 were unemployed in 2010, which is nearly 2 percent higher than overall unemployment for the same time. These credits also are part of the Work Opportunity Tax Credit, which provides incentives for private-sector employers to hire workers in nine target groups that often face significant barriers to employment. To qualify, a business must hire veterans who have been certified by a state agency as meeting all qualifications.
The Returning Heroes Tax Credit is equal to 40 percent of wages. The maximum wages used to calculate the credit depends on how long the veteran was unemployed. If a veteran was unemployed at least four weeks, the credit is calculated on the first $6,000 of wages (up to $2,400). If a veteran who has been unemployed for at least six months is hired, the credit is calculated on the first $14,000 in wages (up to $5,600).
The Wounded Warrior Tax Credit doubles the existing credit to $4,800 for long-term unemployed veterans with service-connected disabilities. Employers hiring eligible veterans who have been unemployed for more than six months may claim the credit for 40 percent of the first $24,000 in wages (up to $9,600).
Also, 13.5 percent (3.7 million) of this country’s businesses are at least partially owned by veterans. These businesses have nearly 8.2 million employees and generate $1.6 trillion in revenue. Veterans who own small businesses can find assistance through the Small Business Administration’s Office of Veterans Business Development.