You have heard of the Work Opportunity Tax Credit. Most employers stop there. They know "there is a credit for hiring veterans" and never learn what it is actually worth. That is a mistake. The veteran piece of WOTC is not one flat number. It is a set of named tiers, and one of them is worth up to $9,600 per hire.

Those tiers have names. The Returning Heroes Tax Credit and the Wounded Warrior Tax Credit. They came out of a 2011 law built to put veterans back to work. This guide breaks down both. What each one covers, who qualifies, and the exact dollar amount you can claim per veteran.

This is the deep dive on the two named credits. For the full how-to-claim walkthrough, the forms, and the filing steps, read our Work Opportunity Tax Credit employer guide. This piece is about the money and who unlocks it.

Where Did the Returning Heroes and Wounded Warrior Credits Come From?

Both credits come from one law. The VOW to Hire Heroes Act of 2011. President Obama signed it on November 21, 2011. Veteran unemployment was high. Congress wanted a fast lever to fix it.

Section 261 of that law is titled "Returning Heroes and Wounded Warriors Work Opportunity Tax Credit." It did not create a brand new program. It expanded the veteran groups inside the existing Work Opportunity Tax Credit. You can read the official rollout in the Department of Labor guidance on the act.

So these are not two separate tax forms. They are nicknames for veteran tiers inside WOTC. The names stuck because they are easy to say. "Returning Heroes" covers unemployed veterans. "Wounded Warrior" covers veterans with a service-connected disability. Same program, different doors.

That matters for how you claim them. You do not file a "Returning Heroes form." You file the standard WOTC paperwork and check the box for the right veteran group. More on that below.

What Is the Returning Heroes Tax Credit?

The Returning Heroes Tax Credit is for hiring an unemployed veteran. It has two tiers. The amount depends on how long the veteran was out of work before you hired them.

Short-term unemployed veteran: up to $2,400

This tier applies when the veteran was unemployed at least 4 weeks. The clock looks at the 1-year period ending on the hire date. The weeks do not have to be in a row. They just have to add up to at least 4 weeks but less than 6 months.

The credit is 40% of the first $6,000 in wages you pay. That is a maximum of $2,400 per veteran. The veteran has to work at least 400 hours to hit the full 40% rate.

Long-term unemployed veteran: up to $5,600

This is the bigger Returning Heroes tier. It applies when the veteran was unemployed at least 6 months. Again, the months do not have to be consecutive. They add up across the 1-year period ending on the hire date.

Here the wage cap is higher. The credit is 40% of the first $14,000 in wages. That is a maximum of $5,600 per veteran. Long-term unemployment is harder to recover from, so Congress made the reward bigger.

What Is the Wounded Warrior Tax Credit?

The Wounded Warrior Tax Credit is for hiring a veteran with a service-connected disability. A service-connected disability means the VA has rated a condition tied to the veteran's service. This credit also has two tiers.

Disabled veteran hired within one year: up to $4,800

This tier applies when you hire a veteran with a service-connected disability within one year of their discharge. The veteran must be entitled to compensation for that disability.

The credit is 40% of the first $12,000 in wages. That is a maximum of $4,800 per veteran. The one-year window is the catch. You have to hire them inside 12 months of separation to use this tier.

Disabled and long-term unemployed veteran: up to $9,600

This is the top of the entire veteran WOTC table. It applies when a veteran has a service-connected disability AND was unemployed at least 6 months in the year before hire.

The wage cap jumps to $24,000. At the 40% rate, that is a maximum of $9,600 per veteran. This tier stacks two kinds of hardship. A disability and a long stretch out of work. That is why it pays the most.

How Does the 40% Rate and Wage Cap Actually Work?

Every dollar amount above comes from the same simple math. Take the wage cap for the tier. Multiply by the credit rate. That gives you the maximum.

The full rate is 40%. To earn it, the veteran has to work at least 400 hours for you in the first year. So $14,000 times 40% gives the $5,600 maximum for a long-term unemployed veteran.

There is a smaller rate too. If the veteran works at least 120 hours but fewer than 400, the rate drops to 25%. Under 120 hours, the credit is $0. So you want the hire to stick. A veteran who quits in week three earns you nothing.

Here is a worked example. You hire a long-term unemployed veteran in the Returning Heroes tier. You pay them $40,000 in the first year. The wage cap for that tier is $14,000, so only $14,000 counts. They worked well past 400 hours, so you get the full 40%. That is a $5,600 credit. The extra $26,000 you paid does not add to the credit. The cap is the ceiling.

One more note for nonprofits. A tax-exempt organization can claim a reduced version of these veteran credits against its share of Social Security tax. The maximum there tops out at $6,240 instead of $9,600. The veteran groups are the same.

Returning Heroes vs Wounded Warrior: Which One Applies?

The line between the two is simple. Does the veteran have a service-connected disability rating?

If no, you are in Returning Heroes territory. The only question is how long they were unemployed. Four weeks or six months. That picks your tier.

If yes, you are in Wounded Warrior territory. The question there is timing and unemployment. Hired within a year of discharge, or disabled plus six months out of work.

You do not get to pick the tier you like best. The veteran's facts decide it. But you do not have to figure this out alone. The state workforce agency reviews the paperwork and certifies which group the veteran lands in. Your job is to screen for it and file on time.

There is also a separate veteran group worth knowing. A veteran who received SNAP benefits can qualify for a credit of up to $2,400. That is not a Returning Heroes or Wounded Warrior tier, but it is part of the same veteran WOTC family.

What Is the Current Status of These Credits in 2026?

This is the part you cannot skip. WOTC authority lapsed on January 1, 2026. Under current law, the credit covers veterans who began work on or before December 31, 2025. A veteran you hire in 2026 is in a gap right now.

WOTC has lapsed before. Congress has reauthorized it more than once, and sometimes retroactively. When that happens, hires made during the gap can still qualify after the fact. So the program is not dead. It is between authorizations.

That changes what you should do, not whether you should do anything. Keep screening new veteran hires. Keep filing the paperwork on time. If Congress restores the credit and makes it retroactive, you want your hires already in the pile. Employers who stopped filing during a lapse miss out when the credit comes back.

How Do You Actually Claim the Credit?

The claim path is the same for both credits. You do not file a special "Wounded Warrior" form. You run the standard WOTC process and the veteran group is certified along the way.

The first step is the one most employers blow. You file IRS Form 8850 with your state workforce agency within 28 calendar days of the veteran's start date. Not the offer date. The start date. Miss the 28 days and the credit is gone for that hire.

The full mechanics, the supporting forms, and the nonprofit path are all in our WOTC employer guide. If you want to stack this with other savings, look at hiring incentives beyond WOTC and state tax incentives for hiring veterans.

Are These Credits Reason Enough to Hire a Veteran?

No. And any employer who hires for the tax break alone is doing it wrong. The credit is a discount on a hire you should make anyway. It is not the reason.

The real case for veteran hiring is performance. Veterans show up. They lead small teams under pressure. They learn systems fast and they stay. The credit just lowers the cost of acting on that.

If you want help building that argument for your own leadership, our internal business case for veteran hiring walks through the numbers a CFO will ask about. The tax credit is one line in that case, not the whole pitch.

Where Do You Find Veterans to Hire?

The credit is worthless if you cannot find the candidate. That is the part most employers underestimate. Veteran resumes are written in military terms. They are spread across job boards. You spend hours filtering.

That is the gap Best Military Resume fills. Veterans build their resumes on our platform, translated into plain civilian language and ready for your roles. The pool stays fresh. We see over 1,000 new veteran profiles every month, and more than 60,000 resumes have been built on the platform.

If you want direct access to that pool, partner with us. You get a steady supply of veteran talent that is already screened, already translated, and ready to interview. Then the Returning Heroes and Wounded Warrior credits are just the bonus on top of a strong hire.