Veteran Hiring Tax Credit in 2026: WOTC Amounts, the Hiatus, and What to File Now

The veteran hiring tax credit is the Work Opportunity Tax Credit, or WOTC, and it is worth between $2,400 and $9,600 per qualified veteran hire. As of January 1, 2026 it has lapsed: employers cannot currently claim it for anyone who starts work after December 31, 2025. A bipartisan extension bill is pending but has not moved out of committee. The practical answer for employers is that you should keep screening and filing Form 8850 within 28 days of each hire anyway, because WOTC has lapsed and been retroactively reinstated several times before, and the paperwork cannot be recreated after the fact.

This guide covers the exact credit amounts by veteran category, who qualifies, what the hiatus does and does not change, the filing mechanics, and how to think about the credit when you are budgeting a remote hire in 2026.

How much is the veteran hiring tax credit worth?

WOTC pays a percentage of qualified first-year wages, and veterans get higher wage caps than any other target group. At 400 or more hours worked the rate is 40 percent of qualified wages; between 120 and 399 hours it drops to 25 percent. Below 120 hours there is no credit at all.

The number people quote is the $9,600, but read the row it comes from. It requires both a service-connected disability and six months of unemployment in the preceding year, which is a narrow group. The two $2,400 rows are what most veteran hires actually fall into, and a meaningful share of veteran hires qualify for nothing at all, because a veteran who moves straight from one job to another is not in any target group.

The credit is nonrefundable for taxable employers and offsets income tax liability, with a 20-year carryforward and a 1-year carryback for unused amounts. Tax-exempt organizations are treated differently: they can claim WOTC only for qualified veterans, and they take it against the employer share of Social Security tax on Form 5884-C rather than against income tax. If you run a nonprofit, veterans are the only target group that does anything for you, which is worth knowing.

Is the veteran hiring tax credit still available in 2026?

Not for new hires. WOTC's statutory authorization ended for individuals who begin work after December 31, 2025, and Congress has not reauthorized it. The credit is in what practitioners call a hiatus, meaning the program still exists in structure but no new certifications can be finally approved.

Three things follow from that, and they are commonly confused with each other:

• Hires that started in 2025 are unaffected. If someone began work on or before December 31, 2025 and you have or can obtain certification, you can still claim first-year wages paid to them in 2026. The credit follows the start date, not the wage payment date.
• Hires starting in 2026 are in limbo, not disqualified. Many state workforce agencies continue to accept and date-stamp certification requests for 2026 start dates while pausing final determinations. Your filing is preserved; the answer is deferred.
• The 28-day filing deadline is still running. The hiatus does not suspend it. Miss the window on a 2026 hire and that hire is permanently ineligible even if Congress reinstates the credit retroactively.

On the legislative side, the Improve and Enhance the Work Opportunity Tax Credit Act (S. 3265 and H.R. 6231) was introduced on November 20, 2025 by Senator Bill Cassidy and Representative Lloyd Smucker. It would extend the credit through December 31, 2030, raise the rate from 40 percent to 50 percent of qualified wages, index the credit to inflation, remove the age cap on SNAP recipients, and add military spouses as a qualifying target group for the first time.

Be realistic about the odds on that specific bill. It was introduced in November 2025 and has not advanced out of committee; GovTrack currently rates its chance of getting past committee at 2 percent, and an earlier version died in the previous Congress. What history supports is not this bill passing but the pattern: WOTC has lapsed and been retroactively reinstated multiple times since 1996, usually folded into a year-end tax package rather than passing as a standalone. Plan for the paperwork, not the bill.

Which veterans qualify for WOTC?

"Veteran" for WOTC purposes has a specific definition, and it is stricter than the everyday meaning. The person must have served on active duty in the US Armed Forces for more than 180 days, or have been discharged or released for a service-connected disability, and must not have had a period of active duty of more than 90 days ending during the 60 days before the hire date.

Meeting that definition is only step one. The hire also has to land in one of the five categories in the table above, which means one of the following applies:

• They or a family member received SNAP benefits for at least 3 of the 15 months before the hire date.
• They were unemployed for a cumulative 4 weeks or more, but less than 6 months, in the year before the hire date.
• They were unemployed for a cumulative 6 months or more in the year before the hire date.
• They have a service-connected disability and are hired within a year of discharge or release from active duty.
• They have a service-connected disability and were unemployed for 6 months or more in the year before hire.

Two disqualifiers catch employers out. Rehires never qualify, so bringing back a former employee produces no credit regardless of category. And relatives and dependents of the business owner are excluded, as are people who own more than 50 percent of the business.

How do you claim the veteran hiring tax credit?

WOTC is a two-stage process: certification through your state workforce agency, then the credit itself on your federal return. The stage that kills claims is the first one, and specifically the deadline.

The 28-day window is the whole game. It runs from the start date, not the offer date or the certification date, and state agencies are strict about it because the deadline is statutory rather than administrative. Build the screening into your offer template so it happens automatically, rather than leaving it as an HR task someone remembers in week five.

One workflow detail matters more during a hiatus than it normally would. Certification letters come back from the state workforce agency by mail or email, often many months after you filed, and during the hiatus they may arrive a year or more later once determinations resume. If those letters land in one person's inbox, they get lost when that person changes roles, and an uncertified filing is worth nothing at tax time. Route agency correspondence to a shared mailbox the whole team can search and keep the date-stamped submission receipts with it, because reconstructing which hires you filed for two years after the fact is not realistic.

Should the tax credit change who you hire?

No, and this is worth saying plainly. WOTC is designed to offset the perceived risk of hiring from groups that face employment barriers; it is not a reason to hire someone who is not right for the job. A $2,400 credit against a $75,000 salary is 3 percent of first-year pay. It will never rescue a bad hire, and the cost of replacing one runs from half to twice annual salary.

Where the credit genuinely changes the math is at the margin, when two candidates are close. It also changes the math on the roles where WOTC target groups cluster: high-volume customer support, operations, and entry-level positions where first-year wages are near the caps and the credit is a larger share of total cost. If you hire twenty support people a year and half qualify, the credit is real money.

The stronger argument for recruiting veterans has nothing to do with tax. Veteran unemployment ran 3.6 percent in April 2026 against 4.3 percent nationally, so this is not a group struggling to find work, which means the ones you reach are choosing you. What you get is verified work history under pressure, security clearances where relevant, and comfort with structure and documented process, which is exactly what distributed teams run on. For remote roles specifically, people who have worked in dispersed units with formal handoffs tend to adapt faster than candidates who have only ever worked in one office.

If you want to be found by that audience, be explicit in the posting. State that the role is fully remote and which states you can employ in, list the certifications you actually accept in place of a degree, and skip the phrase "veteran friendly" unless you can point to something concrete behind it. Our guidance on how to write a remote job description covers the structure, and candidates arriving from military backgrounds are looking at boards like our remote jobs for veterans feed.

What employers should do right now

The hiatus rewards employers who keep the process running and punishes the ones who switch it off. Four things:

• Keep screening every new hire. Not just the ones you think are veterans. WOTC covers ten target groups, and the candidate is the only person who knows whether they are in one.
• Keep filing Form 8850 and ETA 9061 within 28 days, and keep the date-stamped proof of submission. This is the only step that cannot be redone later if the credit is reinstated retroactively.
• Do not book the credit as expected revenue. Treat any 2026 filing as a contingent asset until Congress acts. Budget the hire as if the credit does not exist.
• Check your state programs. Several states run their own veteran hiring credits that are entirely separate from WOTC and unaffected by the federal lapse. Illinois, Maryland, New York and others have had versions of these, and the amounts are smaller but the credit is available now.

Finally, confirm the current federal status before you rely on anything here. This is a moving target, the reinstatement could arrive in any year-end package, and a tax professional who handles your return is the right person to make the call for your specific situation. Nothing in this article is tax advice.

If you are costing out a remote hire more broadly, the full picture is in what it costs to hire a remote employee and benefits for remote employees. To start sourcing, plans are on remote job posting sites and the employer overview is at hire remote workers.