Bill Offers Bigger Tax Breaks for Hiring Vets: Credit Boosted to 50% on Higher Wages

This bill, the Honor and Hire Veterans Act of 2025, aims to make hiring military veterans more financially attractive for businesses by tweaking the existing Work Opportunity Tax Credit (WOTC). It amends the Internal Revenue Code to increase the tax credit percentage specifically for qualified veterans to 50% of their first-year wages, compared to the standard 40% for other eligible groups. The core goal is straightforward: give companies a stronger nudge to bring veterans onto their payroll.

More Bang for the Buck: Upping the Credit

So, what does this mean in practice? The WOTC is basically a tax incentive for employers who hire individuals from specific groups facing employment barriers. This bill significantly sweetens the deal for hiring veterans in two ways. First, the credit itself is larger – that 50% rate means potentially more dollars back for the employer. Second, it increases the amount of wages eligible for the credit. For instance, the bill raises the maximum wages used to calculate the credit for certain veteran categories from $12,000 to $18,000, from $14,000 to $21,000, and from $24,000 to $36,000, depending on the specific veteran qualification. A bigger wage base plus a higher credit percentage equals a more substantial tax break, making a veteran hire potentially more appealing financially. These changes would apply to veterans who start work after the bill becomes law.

Staying Power Matters

The bill also includes a provision addressing situations where the employment doesn't last for the minimum required period. If a hired veteran leaves the job before meeting certain time thresholds (as outlined in Section 51(i)(3)(A) of the tax code), the tax credit rate drops to 25%. This applies whether the initial rate was the new 50% for veterans or the standard 40%. It's a way to ensure the incentive promotes not just hiring, but retaining veterans in their new roles. While the primary aim is to boost veteran employment, mechanisms like this encourage businesses to focus on longer-term fits.