New Veteran Hiring Tax Credit Jumps to 50% of Wages, Boosting Cap to $36,000

The “Honor and Hire Veterans Act of 2025” is making a significant change to the Work Opportunity Tax Credit (WOTC) to incentivize businesses to hire veterans. Specifically, for employers who hire qualified veterans, the tax credit they can claim jumps from the standard 40 percent up to 50 percent of the veteran’s qualified first-year wages. This is a direct financial boost aimed at getting more veterans into civilian jobs. Even more importantly, the bill raises the maximum amount of wages that count toward this credit for veterans, increasing the top limit from $24,000 to a much more substantial $36,000. These changes apply to anyone hired after the bill becomes law.

The New Math for Hiring Vets

Think of the WOTC as a coupon the government gives employers for hiring people who often face employment barriers. For years, the maximum credit was calculated on $24,000 in wages. Under this new section, if a qualified veteran earns $36,000 or more in their first year, the employer can now claim 50 percent of that $36,000—a potential credit of up to $18,000. Under the old rules, the maximum credit would have been only $9,600 (40% of $24,000). This change makes hiring veterans significantly more attractive, especially for roles that pay a solid middle-class wage.

Why This Matters for the Job Market

For a small business owner—say, a construction firm or a software startup—this is a powerful incentive. If they are choosing between two equally qualified candidates, one a veteran and one not, the potential $18,000 tax credit offers a clear financial advantage to hiring the veteran. This is designed to reduce veteran unemployment and recognize the skills and training military personnel bring to the table. The increased wage cap is key here; it means the credit is valuable for hiring veterans into higher-skill, higher-paying roles, not just entry-level positions.

The Short-Term Employment Catch

There is one provision that remains standard: the credit is cut in half if the employee doesn't stay on the job for a minimum required period. If the veteran leaves early, the employer’s credit drops to 25 percent. This mechanism is in place to ensure the credit is earned for stable, long-term employment, not just a quick hire-and-fire cycle. While necessary for accountability, it does mean employers will be monitoring that minimum employment period closely. Overall, however, the structure is a clear win for veterans seeking employment and the businesses looking to hire them.