Tax Credits and Financial Incentives for Hiring Veterans

Tax credits and financial incentives for hiring veteran employees come from the federal government, as well as many states.

Hiring a veteran shouldn’t only be about claiming these tax credits, but of course, it doesn’t hurt to have them available. Small businesses should be aware of what’s available if they do opt to hire veterans.

Below is an overview of some of the vet hiring programs, and financial incentives available.

Special Employer Incentives for Hiring Veterans

According to the VA, the Special Employer Incentives (SEI) program, aims to assist employers who hire veterans. This program brings qualified veterans together with employers who have specialized roles available. When a veteran successfully completes the hiring program, they should stay on with the organization. Under this program, businesses can hire trainees and pay them apprenticeship wages.

When an employer participates in this program, they are reimbursed for up to half the salary they pay the veteran, to cover supplies and equipment, instructional costs, and loss of production that may occur.

Other facts of the program include:

  • VA facilitates this program—the role of the VA is to find suitable employment opportunities and coordinate the efforts that go on between the employer and the veteran.
  • Reimbursement is available for up to 50 percent of the veteran’s salary during this program.
  • The SEI program usually lasts for around six months.
  • Veterans who participate in this program receive the immediate benefits that come from being an employee, including income, and they have an increased chance of being hired because they are hired as part of an employer incentive program.

For veterans and organizations who want to participate in this program, they can contact a VA regional office and speak to a VR&E representative, or visit the VA’s website.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC), is a federal tax credit which is available to employers who hire and retain veterans. Under this tax credit, there is no limit to the number of employees and employer can hire to qualify. For employers, the cost of doing business is lowered, paperwork is minimal, and it’s simple to apply for this.

According to the government, WOTC can reduce employers’ federal income tax liabilities by as much as $9,600 per employee hired. Within tax-exempt organizations, it’s possible to hire veterans and receive a tax credit against what the employer has to pay of Social Security taxes.

To be eligible, employees have to work at least 120 hours in their first year of employment. To apply for WOTC, employers have to complete IRS Form 8850 by the day they make the job offer. There are a few other forms that have to be completed, and then a State Workforce Agency determines whether or not the employee meets eligibility standards.

Certain standards have to be met for veterans. A veteran has to have served on active duty in the Armed Forces for more than 180 days and been discharged or released from active duty for a service-connected disability. A veteran can’t have a period of active duty of more than 90 days that ended during the 60-day period which ends on the hiring date.

A veteran also has to meet one of a few other standards. They have to either be a member of a family receiving Supplemental Nutritional Assistance Program benefits, or they’re entitled to compensation for a service-connected disability and unemployed for a period of at least four weeks but less than six months in the year that ends on the date they’re hired.

On-the-Job Training (OJT) and Apprenticeship Programs

Along with the tax credits above, employers can also consider becoming Approved for GI Bill Registered Apprenticeship programs. When employers participate in this program, they can help veteran apprentices who have earned educational benefits. For example, veterans with existing benefits under the GI Bill can qualify for a monthly stipend which is paid for by the VA. This is in addition to the wages earned in an apprenticeship.

These on-the-job and apprenticeship programs are available to veterans who want to learn a trade or skill through the workplace, rather than participating in a formalized classroom program. With these programs, veterans will usually go through a training contract period with their employer or a union.

Following completion of the training period, the veteran receives job certification or journeyman status.

The benefits to employers who participate in this program include the ability to receive consulting services from the Department of Labor regarding how to design, develop and structure their Registered Apprenticeship program, and there is a certain level of credibility that stems from registering this type of program.

Participation can be used by employers as a recruiting tool, and it’s an excellent way to increase employee retention and reduce turnover costs. With these programs, it also makes it easier for employers to track their return on investment.

What’s also good about this program is the fact that it allows employers to build their own talent pipeline, and avoid some of the pitfalls of the skills shortage so many businesses are facing right now.

HIRE Vets Medallion Program

The HIRE Vets Medallion Program was signed into law May 5, 2017, by President Trump. The program was created under the Honoring Investments in Recruiting and Employing American Military Veterans or HIRE Vets act. The program provides recognition to employers who recruit, employee and retain veterans.

These are all federal benefits and programs, but employers should look at what’s offered by their state as well. For example, in Florida, there is something called Veterans Florida Employer Services. This is based on a Workforce Training Grant. Employers that are considered veteran-friendly can receive up to $8,000 for every veteran they hire and train.

Employers also gain free access to a talent pool of qualified candidates. To participate in this Florida program, there are certain guidelines. For example, employees must be offered permanent, full-time employment, and they must require non-degree, specialized skills-based training for a year or less.

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