Business Incentives for Hiring Veterans

Employers gain more than trained and disciplined workers when they hire veterans. They also can benefit from financial incentives stemming from programs to help veterans get jobs.

Individual states and the federal government offer a patchwork of programs that give tax breaks to companies hiring vets. Several of the programs were started after 2008 recession, when a poor economy conspired with a scaling back of troops in Iraq and Afghanistan to make finding work especially difficult for returning service members.

The federal government led the way with the Veterans Opportunity to Work (VOW) to Hire Heroes Act, enacted by Congress in November 2011 and have been extended as part of the Protecting Americans from Tax Hikes (PATH) Act of 2015. The PATH Act extends the Work Opportunity Tax Credit Program, providing employer tax credits for hiring vets under the Returning Heroes and Wounded Warrior Credit initiatives.

Incentives for Hiring Veterans

Hiring veterans is a great way to keep the tax man off the front doorstep.

For example, tax credits for employers include the following:
  • Up to $9,600 for hiring a veteran with a service disability who has been job-hunting for more than six months.
  • Up to $5,600 for hiring a veteran who has been unemployed for more than six months.
  • Up to $2,400 for hiring a veteran who is unemployed for more than four weeks but less than six months

The types of businesses eligible for the credit also has been expanded recently. Included now are nonprofit organizations, which previously were excluded from the tax breaks.

Employers who hire veterans can receive reimbursement from the Department of Veterans Affairs under the Special Employment Incentives program. Participating employers must train and provide practical hands-on experience to veteran employees. In exchange, they receive government reimbursement for as much as half a veteran’s salary during the program, which lasts up to six months.

The reimbursement covers expenses during instruction, loss of production time due to training, and supplies and equipment needed for training.

There are also 39 states that sponsor Enterprise Zone Programs, many of which allow employers to claim additional credits for a portion of employee wages paid to veterans.

The U.S. Department of Labor is so bullish on businesses hiring veterans that it has produced a step-by-step tool kit to make it easier for employers to do it. The kit, which addresses the challenges of hiring people with post-traumatic stress disorder (PTSD) or traumatic brain injuries, includes strategies to recruit veterans, how best to accommodate them, how to retain them, and how to benefit financially by having them.

The Department of Veteran Affairs also has a Vocational Rehabilitation and Employment Program that has become a national employment resource for employers. The service program will help pay to train veterans with service-connected disabilities before an employer even puts them on the payroll.

The federal government also operates an internal program to encourage its branches to hire veterans. The Feds Hire Vets initiative was implemented through an executive order in 2009.

Bill Fay

Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at Debt.org is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at bfay@debt.org.

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