Policymakers in federal and state governments continue to focus on targeted hiring-related tax credits. As many retailers take advantage of federal and state hiring credits, it is important to recognize new trends in the public policy shaping these programs. An area of focus for policymakers that has recently emerged and is highly publicized is the creation of new tax credits encouraging the employment of veterans, specifically unemployed veterans. Employment of veterans has become a priority for many businesses as they recognize the tremendous talent and skill our servicemen and -women can bring to their organizations.
In recent years, several states have enacted or modified existing tax credits for veteran employment. For example, the Illinois Veterans Jobs Tax Credit was introduced beginning with veteran hires in 2007 and provided a credit limited to $600. In 2010, Illinois increased the credit limit to $1,200 per qualified veteran, and in July 2012 the credit limit was further increased to $5,000. Along with the increased credit limit, the qualifications were modified, requiring the veteran to be unemployed.
The majority of state veteran tax credits were introduced during 2011 and 2012, following the enactment of the American Jobs Act of 2011. This act amended the Federal Work Opportunity Tax Credit to increase the value of the credit for existing categories of veterans and to expand it to include new categories of unemployed veterans who are not disabled or receiving food assistance. Several of the states — such as Alaska, Illinois, Vermont and Wisconsin — require the veteran to be unemployed at the time of hire to qualify for the credit. Wisconsin requires the veteran to also be disabled. New Mexico, Utah and Vermont require the veteran to be employed full-time, and Delaware, Illinois, Utah and Vermont require a sustained employment period before the credit is allowed.
A few states include the veteran hire as one of several qualifying categories for their tax credit programs such as the longstanding California Enterprise Zone Hiring Credit and the New York Youth Works Tax Credit. Connecticut provides an increased value for the Job Expansion Tax Credit when the new job is filled by a veteran.
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