Hiring Credits

WOTC Expansion with a Tax Credit for Hiring Military Spouses


Emptech's founder, Jeff Aleixo


Jeffrey Aleixo

tax credit for hiring military spouses

Within the past year, we have seen changes and additions to The Work Opportunity Tax Credit. There has been a retroactive extension and the addition of the Long-Term Unemployed to eligible WOTC recipients. Now, another addition to WOTC is being proposed, a tax credit for hiring military spouses.

The Military Spouse Employment Act of 2018

The bill is known as the Military Spouse Employment Act of 2018. Senator Tim Kaine from Virginia, Senator John Boozman (R-AR), and Jon Tester (D-MT) are introducing the bill. The goal is to hire underemployed and unemployed military spouses. Reports indicate between 12-25% of military spouses are unemployed, with another 25% of military spouses underemployed. According to Federal News Radio, Senator Tim Kaine (D-VA), decided to propose a tax credit for hiring military spouses after a meeting with them and employers in October.

Flexible Spending Accounts for Childcare

The bill also pushes to provide access to flexible spending accounts for childcare, on top of a tax credit for hiring military spouses. This would provide a pre-tax option to savings similar to what many large organizations offer in The United States. Lack of funds for childcare or reliable options for childcare greatly affect the ability of both spouses to remain employed.

The Military Spouse Employment Act will stand behind not only military personnel but also their

families. A tax credit for hiring military spouses will add a new level of support by encouraging employers to hire qualified individuals who often get passed up on opportunities due to circumstances out of their control.

The bill will also provide childcare-saving options not currently available to military personnel.

Learn about WOTC eligibility, the process of claiming the credit, and how this Federal tax incentive benefits employers and employees in a multitude of ways.

Importance of the Bill

The Military Spouse Employment Act of 2018 is recognized as a piece of legislation that addresses challenges faced by military spouses for decades.

The Bill focuses on:

  • the direct hiring authority held by federal agencies to place military spouses,
  • employment of military spouses in DoD-held contracts,
  • improvements to DoD spouse employment programs at the implementation and installation level,
  • child care challenges and accessibility,
  • expansion of Military OneSource benefits in law to one full year after separation for military service for both the service member and their immediate family,
  • reforms in the transition assistance programs to include spouses,
  • growth in public private partnerships,
  • removal of barriers to military spouse micro-business for families who live on the installation, and
  • further assessment on permanent change of station effects on military spouse employment.

A tax credit for hiring military spouses is particularly interesting given the recent, and potentially recurring, federal shutdown that might prevent service members from receiving their paychecks on time.

Over the years the Work Opportunity Tax Credit has changed to match constantly evolving needs in the country’s employment landscape. However, it remains a highly effective way of creating an opportunity for historically underemployed groups to rejoin the workforce and get off of public assistance.

In the past, the WOTC program was difficult to administer, requiring exhaustive paperwork prone to mistakes. Because of the difficulty of the WOTC process, many businesses were not able to take advantage of the opportunity to earn these valuable tax credits. Nowadays, many of the program’s challenges were removed due to electronic WOTC solutions that enable employers to automate the entire process and achieve maximized credit yield without administrative expenses.

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Editor’s Note: This post has been updated for accuracy and comprehensiveness.

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