HERO Act Expands Business Tax Credit for Hiring Youth Year-Round, Adds Focus on 'Disconnected' Young Workers

The 'Helping to Encourage Real Opportunities (HERO) for Youth Act of 2025' aims to give businesses a bigger nudge to hire young people by tweaking the existing Work Opportunity Tax Credit (WOTC). This legislation expands when employers can claim the credit for young hires, increases the credit amount (though specifics on the increase involve redesignating code sections), and carves out a new category specifically targeting 'disconnected youth' – young individuals facing significant barriers to employment.

More Than Just Summer Gigs

Currently, the WOTC offers a tax break for hiring young people, often focused on summer employment. This bill changes that game. It extends the credit eligibility for youth hires beyond the summer months, making it applicable year-round. Specifically, it allows employers to claim the credit for hiring secondary school students who work no more than 20 hours per week between September 16th and April 30th. Think about your local coffee shop or retail store – under this bill, they could get a tax credit for hiring a high school student for after-school shifts during the academic year, not just for a summer job. This change, detailed in the modifications to Section 51(d)(7) of the Internal Revenue Code, aims to create more consistent work opportunities for students.

Opening Doors for 'Disconnected Youth'

The most significant addition is the creation of a new WOTC category for 'disconnected youth.' So, who fits this description according to the bill? It defines them as individuals aged 16 through 24 who haven't regularly attended school or been regularly employed in the six months before being hired and lack basic skills. It also includes individuals aged 16 through 20 who are eligible foster children (as defined in section 152(f)(1)(C)) and were in foster care sometime during the 12 months before being hired. This targets young people who might otherwise fall through the cracks, providing a direct financial incentive for businesses to invest in hiring and potentially training them. For instance, a small manufacturing company could receive a tax credit for hiring a 22-year-old who lacks a high school diploma and has struggled to find steady work.

The Bottom Line: What This Means on the Ground

If enacted, this bill essentially sweetens the deal for employers considering hiring younger workers. By expanding the timeframe for student hires and adding the 'disconnected youth' category, it broadens the pool of eligible young employees under the WOTC. For businesses, this translates to a potentially larger tax credit, reducing the cost of bringing young talent onboard. For young people, particularly students looking for part-time work and those defined as 'disconnected,' it could mean more doors opening to gain valuable work experience. The changes apply to individuals who start work after the date the Act is signed into law. The practical challenge will lie in how employers verify an individual's status, particularly for the 'disconnected youth' category, ensuring the credit reaches its intended target.