New Tax Credit Expands Year-Round Part-Time Jobs for Students, Targets 'Disconnected Youth'

The aptly named Helping to Encourage Real Opportunities (HERO) for Youth Act of 2025 is all about giving employers a financial nudge to hire young people who need a leg up. It does this by significantly expanding the Work Opportunity Tax Credit (WOTC), which is essentially a tax break for businesses that hire individuals from specific groups facing employment barriers.

The Student Employment Upgrade

First, let’s talk about students. The existing WOTC has a credit for hiring youth during the summer. The HERO Act changes this game completely. It strips the word “summer” from the relevant tax code sections and now allows employers to claim the credit for hiring students who work part-time during the school year. Specifically, if you’re a secondary school student working up to 20 hours a week between September 16th and April 30th, your employer can still claim that tax break. This is a big deal because it turns a seasonal incentive into a year-round one, offering students more stable, ongoing income and work experience while they’re still in school. Think of the high schooler who needs to work a few shifts after class or on weekends—this bill makes them a more attractive hire.

Creating a Lifeline for 'Disconnected Youth'

The bill’s biggest move is creating an entirely new category for the WOTC called “disconnected youth.” This targets young people who are struggling the most to get into the workforce. To qualify, an individual must meet one of two paths at the time of hiring.

Path 1: The individual must be between 16 and 25 years old and certify that for the six months before they were hired, they weren't regularly in school, weren't regularly employed, and they lack basic job skills, making them “not readily employable.” This category is designed for those who have fallen out of the education and employment systems.

Path 2: This path focuses on those recently in the foster care system. It applies to individuals aged 16 to 21 who were certified as being in foster care at some point during the 12 months leading up to their hiring date. This provides a specific incentive to hire former foster youth, a group that often faces significant hurdles when transitioning to independence.

The Real-World Impact and the Fine Print

For employers, this bill is a clear incentive to invest in training and hiring young workers who might otherwise be overlooked. For a small business, the tax credit offsets the cost of training a new employee, especially one who needs extra guidance. For the young person, it means more doors open to entry-level jobs and a chance to build a resume.

There is, however, a critical administrative step: eligibility for these credits must be certified by a designated local agency. This is where the rubber meets the road. While the goal is clear—to help young people—the definition in Path 1, “not readily employable,” is subjective. This relies heavily on local agencies to consistently and fairly determine who qualifies. If that certification process gets bogged down or applied unevenly, it could slow down the hiring benefit intended by the bill. Ultimately, the HERO Act offers a significant boost to youth employment efforts, providing tax relief for employers willing to give students and those facing major barriers a real shot at a career.