Legislation Summary

• Increases the rate of the differential wage payment tax credit from 20% to 50% and requires that the maximum dollar amount of such credit be adjusted for inflation after 2023. 
• The credit is allowed to employers for their employees who are active duty members of the uniformed services. 

Issue Background

• Would provide a tax credit for small businesses who offer differential pay to National Guard employees while they are away on deployment.
• Would also reward and encourage employers to offer differential pay and see to it that no family faces financial burden due to military service.
• Reduce the threshold, Reserve Component servicemembers are able to deduct military travel- related expenses from 100 miles to 50 miles.

AFSA’s Position: Support

• By encouraging more firms to hire these National Guard and Reserve personnel by raising the employer tax credit from 20% to 50%, thereby balancing out any potential income inequalities during deployment.
• Enhances our military's quality of life, as well as recruitment and retention.

Questions?

If you have any questions about this legislation, please reach out to AFSA's Military & Government team at Milgov3@hqafsa.org.