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Tax Credits & Incentives for Hiring Veterans

The federal government will literally pay you to hire veterans. The Work Opportunity Tax Credit (WOTC) offers up to $9,600 per veteran hire. Most employers don't claim it because they don't know it exists or think the paperwork is too complex. It's not.

Work Opportunity Tax Credit (WOTC)

Veteran unemployed 4+ weeks$2,400
40% of first $6,000 wages·Member of household receiving SNAP for 3+ months, or unemployed 4+ weeks
Veteran unemployed 6+ months$5,600
40% of first $14,000 wages·Unemployed for 6+ months in year prior to hire
Disabled veteran$4,800
40% of first $12,000 wages·VA service-connected disability
Disabled veteran unemployed 6+ months$9,600
40% of first $24,000 wages·VA service-connected disability AND unemployed 6+ months

How to Claim WOTC

  1. 1. File IRS Form 8850 within 28 days of the veteran's start date with your state workforce agency.
  2. 2. The state agency certifies the veteran's eligibility (usually 2-4 weeks).
  3. 3. Claim the credit on your federal tax return using IRS Form 5884.
  4. 4. The veteran must work at least 120 hours (40% credit) or 400 hours (full credit).

Many payroll providers (ADP, Paychex, Gusto) can automate WOTC screening and filing. Ask your provider.

Other Programs

SkillBridge

Department of Defense

Transitioning service members intern at your company during their last 180 days of service. The DoD continues paying their salary, benefits, and housing. You get a trained, cleared worker at zero cost for up to 6 months. If it works out, you hire them when they separate.

Apply at skillbridge.osd.mil to become an approved SkillBridge employer.

Special Employer Incentive (SEI)

Department of Veterans Affairs

The VA reimburses up to 50% of a veteran's salary during a training period for veterans with service-connected disabilities. You train the veteran, the VA pays half the cost.

Contact your local VA Vocational Rehabilitation counselor.

Veterans' Preference in Federal Contracting

SBA

Service-Disabled Veteran-Owned Small Businesses (SDVOSB) receive contracting preferences from federal agencies. If you're a veteran-owned business, you get a competitive advantage on government contracts.

Register at vetbiz.va.gov for SDVOSB certification.

Tax credit amounts current as of 2026. Consult a tax professional for your specific situation. State-level incentives vary — check with your state workforce development agency for additional programs.