HERO Act Expands Tax Credit for Employers Hiring Students Year-Round and Youths from Foster Care

The Helping to Encourage Real Opportunities (HERO) for Youth Act of 2025 is tackling youth employment by sweetening the pot for businesses that hire young people. This bill significantly expands the existing Work Opportunity Tax Credit (WOTC), which is essentially a discount employers get on their taxes for hiring individuals from certain groups facing employment barriers.

From Summer Job to Year-Round Gig

Right now, the WOTC for youth often focuses on summer employment. This bill changes that by making the credit available for employers who hire secondary school students for part-time work throughout the entire school year. Specifically, employers can claim the credit for students working up to 20 hours per week between September 16th and April 30th. Think of a local coffee shop or grocery store owner: if they hire a high school student to work 15 hours a week during the school year, they can now claim the tax credit, which was previously harder to access outside of the summer months. This incentivizes businesses to create more structured, year-round part-time roles, offering students a steady paycheck and work experience while keeping their focus on school.

Targeting the 'Disconnected Youth'

Perhaps the biggest change is the creation of a brand-new WOTC category focused on what the bill calls "disconnected youth." This is an effort to get specific groups of young people who face significant hurdles into the workforce. The credit targets two main groups, both certified by a local agency.

First, there are young adults aged 16 to 24 who are certified as lacking basic skills. To qualify, they must self-certify that for the six months before being hired, they weren't regularly in school and didn't hold a regular job. For a small business owner, hiring someone who fits this description—say, a 22-year-old who has been struggling to find their footing after dropping out of college—now comes with a substantial tax incentive. The challenge here is that the definition of "lacks basic skills" is a little squishy, relying on self-certification and agency interpretation, which could lead to some administrative headaches down the line.

Second, the bill provides a specific incentive for hiring youth who have been in the foster care system. If an employer hires someone aged 16 to 21 who was an eligible foster child during the 12 months immediately preceding their hire date, that employer qualifies for the credit. This is a direct, practical measure to support a highly vulnerable population known to face major employment challenges upon aging out of the system. For a construction firm or a tech company looking to hire entry-level staff, this credit acts as a financial nudge to give a young person from foster care a much-needed first chance. These changes apply to anyone hired after the law is enacted, meaning the incentive starts immediately for employers ready to tap into this talent pool.