Veterans/employer incentives

AN ACT Relating to employer tax incentives for the support of 1
veterans and military families; adding a new section to chapter 82.04 2
RCW; adding a new section to chapter 82.16 RCW; creating a new 3
section; and providing expiration dates. 4
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:5
NEW SECTION. Sec. 1. A new section is added to chapter 82.04 6
RCW to read as follows: 7
(1) Beginning January 1, 2026, a person is allowed a credit 8
against the tax due under this chapter as provided in this section. 9
The credit equals 20 percent of wages and benefits paid to or on 10
behalf of a qualified employee up to a maximum of $3,000 for each 11
qualified employee hired on or after January 1, 2026.12
(2) No credit may be claimed under this section until a qualified 13
employee has been employed for at least two consecutive full calendar 14
quarters. 15
(3) Credits are available on a first-in-time basis. The 16
department must keep a running total of all credits allowed under 17
this section and section 2 of this act during each fiscal year. The 18
department may not allow any credits that would cause the total 19
credits allowed under this section and section 2 of this act to 20
exceed $5,000,000 in any fiscal year. If all or part of a claim for 21
H-0156.1
HOUSE BILL 1016
State of Washington 69th Legislature 2025 Regular Session
By Representatives Abbarno, Shavers, Leavitt, Marshall, Jacobsen,
Eslick, McClintock, Callan, Orcutt, and Caldier
Prefiled 12/05/24. Read first time 01/13/25. Referred to Committee
on Finance.
p. 1 HB 1016
credit is disallowed under this subsection, the disallowed portion is 1
carried over to the next fiscal year. However, the carryover into the 2
next fiscal year is only permitted to the extent that the cap for the 3
next fiscal year is not exceeded. Priority must be given to credits 4
carried over from a previous fiscal year. The department must provide 5
written notice to any person who has claimed tax credits in excess of 6
the limitation in this subsection. The notice must indicate the 7
amount of tax due and provide that the tax be paid within 30 days 8
from the date of the notice. The department may not assess penalties 9
and interest as provided in chapter 82.32 RCW on the amount due in 10
the initial notice if the amount due is paid by the due date 11
specified in the notice, or any extension thereof.12
(4) The credit may be used against any tax due under this 13
chapter, and may be carried over until used, except as provided in 14
subsection (9) of this section. No refunds may be granted for credits 15
under this section. 16
(5) If an employer discharges a qualified employee for whom the 17
employer has claimed a credit under this section, the employer may 18
not claim a new credit under this section for a period of one year 19
from the date the qualified employee was discharged. However, this 20
subsection (5) does not apply if the qualified employee was 21
discharged for misconduct, as defined in RCW 50.04.294, connected 22
with his or her work or discharged due to a felony or gross 23
misdemeanor conviction, and the employer contemporaneously documents 24
the reason for discharge. 25
(6) Credits earned under this section may be claimed only on 26
returns filed electronically with the department using the 27
department's online tax filing service or other method of electronic 28
reporting as the department may authorize. No application is required 29
to claim the credit, but the taxpayer must keep records necessary for 30
the department to determine eligibility under this section including 31
records establishing the person's status as a veteran.32
(7) No person may claim a credit against taxes due under both 33
this chapter and chapter 82.16 RCW for the same qualified employee.34
(8) The definitions in this subsection apply throughout this 35
section unless the context clearly requires otherwise.36
(a)(i) "Qualified employee" means a veteran, or spouse of an 37
active duty military member who is employed in a permanent full-time 38
position for at least two consecutive full calendar quarters. For 39
seasonal employers, "qualified employee" also includes the equivalent 40
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of a full-time employee in work hours for two consecutive full 1
calendar quarters. 2
(ii) For purposes of this subsection (8)(a), "full time" means a 3
normal work week of at least 35 hours. 4
(b) "Veteran" means every person who has received a qualifying 5
discharge as defined in RCW 73.04.005 or is currently serving 6
honorably in any branch of the armed forces of the United States, 7
including the national guard and armed forces reserves.8
(9) Credits allowed under this section can be earned for tax 9
reporting periods through January 1, 2036. No credits can be claimed 10
after January 1, 2037. 11
(10) This section expires January 1, 2037. 12
NEW SECTION. Sec. 2. A new section is added to chapter 82.16 13
RCW to read as follows: 14
(1) Beginning January 1, 2026, a person is allowed a credit 15
against the tax due under this chapter as provided in this section. 16
The credit equals 20 percent of wages and benefits paid to or on 17
behalf of a qualified employee up to a maximum of $3,000 for each 18
qualified employee hired on or after January 1, 2026.19
(2) No credit may be claimed under this section until a qualified 20
employee has been employed for at least two consecutive full calendar 21
quarters. 22
(3) Credits are available on a first-in-time basis. The 23
department must keep a running total of all credits allowed under 24
this section and section 1 of this act during each fiscal year. The 25
department may not allow any credits that would cause the total 26
credits allowed under this section and section 1 of this act to 27
exceed $5,000,000 in any fiscal year. If all or part of a claim for 28
credit is disallowed under this subsection, the disallowed portion is 29
carried over to the next fiscal year. However, the carryover into the 30
next fiscal year is only permitted to the extent that the cap for the 31
next fiscal year is not exceeded. Priority must be given to credits 32
carried over from a previous fiscal year. The department must provide 33
written notice to any person who has claimed tax credits in excess of 34
the limitation in this subsection. The notice must indicate the 35
amount of tax due and provide that the tax be paid within 30 days 36
from the date of the notice. The department may not assess penalties 37
and interest as provided in chapter 82.32 RCW on the amount due in 38
p. 3 HB 1016
the initial notice if the amount due is paid by the due date 1
specified in the notice, or any extension thereof. 2
(4) The credit may be used against any tax due under this 3
chapter, and may be carried over until used, except as provided in 4
subsection (9) of this section. No refunds may be granted for credits 5
under this section. 6
(5) If an employer discharges a qualified employee for whom the 7
employer has claimed a credit under this section, the employer may 8
not claim a new credit under this section for a period of one year 9
from the date the qualified employee was discharged. However, this 10
subsection (5) does not apply if the qualified employee was 11
discharged for misconduct, as defined in RCW 50.04.294, connected 12
with his or her work or discharged due to a felony or gross 13
misdemeanor conviction, and the employer contemporaneously documents 14
the reason for discharge. 15
(6) Application for credit must be made prior to claiming a 16
credit. The application must be in a form and manner prescribed by 17
the department and must include, but is not limited to, information 18
establishing a person's status as a qualified employee. Applications 19
must be approved on a first-in-time basis. The department must rule 20
on the application within 60 days of receipt, except that the 21
department may extend the time of processing such application upon 22
notice to the taxpayer that ruling on the application cannot be 23
completed within such time. Credits earned under this section may be 24
claimed only on returns filed electronically with the department 25
using the department's online tax filing service or other method of 26
electronic reporting as the department may authorize.27
(7) No person may claim a credit against taxes due under both 28
chapter 82.04 RCW and this chapter for the same qualified employee.29
(8) The definitions in this subsection apply throughout this 30
section unless the context clearly requires otherwise.31
(a)(i) "Qualified employee" means a veteran, or spouse of an 32
active duty military member who is employed in a permanent full-time 33
position for at least two consecutive full calendar quarters. For 34
seasonal employers, "qualified employee" also includes the equivalent 35
of a full-time employee in work hours for two consecutive full 36
calendar quarters. 37
(ii) For purposes of this subsection (8)(a), "full time" means a 38
normal work week of at least 35 hours. 39
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(b) "Veteran" means every person who has received a qualifying 1
discharge as defined in RCW 73.04.005 or is currently serving 2
honorably in any branch of the armed forces of the United States, 3
including the national guard and armed forces reserves.4
(9) Credits allowed under this section can be earned for tax 5
reporting periods through January 1, 2036. No credits can be claimed 6
after January 1, 2037. 7
(10) This section expires January 1, 2037. 8
NEW SECTION. Sec. 3. This section is the tax preference 9
performance statement for the tax preferences contained in sections 1 10
and 2, chapter . . ., Laws of 2025 (sections 1 and 2 of this act). 11
This performance statement is only intended to be used for subsequent 12
evaluation of the tax preference. It is not intended to create a 13
private right of action by any party or be used to determine 14
eligibility for preferential tax treatment.15
(1) The legislature categorizes the tax preferences as those 16
intended to induce certain designated behavior by taxpayers and 17
create or retain jobs, as indicated in RCW 82.32.808(2) (a) and (c).18
(2) It is the legislature's specific public policy objective to 19
provide employment for veterans and military families. It is the 20
legislature's intent to provide employers a credit against the 21
business and occupation tax or public utility tax for hiring veterans 22
and military spouses, which would reduce an employer's tax burden 23
thereby inducing employers to hire and create jobs for veterans and 24
military spouses. 25
(3) If a review finds that the number of unemployed veterans and 26
military spouses decreased by 10 percent, then the legislature 27
intends for the legislative auditor to recommend extending the 28
expiration date of the tax preference. 29
(4) In order to obtain the data necessary to perform the review 30
in subsection (3) of this section, the joint legislative audit and 31
review committee should refer to the veteran unemployment rates 32
available from the employment security department and the bureau of 33
labor statistics and may refer to any other data collected by the 34
state. 35
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