(The Center Square) – While veterans typically struggle less with unemployment than civilians, Washington lawmakers filed a bill Thursday that, if approved, would provide tax relief to employers hiring retired military.
The move is one of many that the state has considered recently, in addition to passing other tax exemptions, increased legal protections and crisis support for veterans. If approved, House Bill 1016 would provide tax credits for hiring veterans and spouses of active-duty personnel.
The legislation came from both sides of the aisle, with Rep. Peter Abbarno, R-Centralia, and Rep. Clyde Shavers, D-Oak Harbor, backing the bipartisan bill.
“Beginning January 1, 2026, a person is allowed a credit against the tax due under this chapter as provided in this section,” according to the proposed bill. “The credit equals 20 percent of wages and benefits paid to or on behalf of a qualified employee up to a maximum of $3,000 for each qualified employee hired on or after January 1, 2026.”
The Legislature would make the credits available on a “first-in-time” basis, meaning it’s first come, first serve, with the total credits limited to $5 million annually. Assuming employers levy the $3,000 maximum for each employee, it could support partial wages for over 1,600 people.
Qualifying employees include veterans and spouses of active-duty service members employed full-time for at least two consecutive quarters. Abbarno calls it a smart investment in workforce development that would expand the state’s revenue and tax base while reducing unemployment.
He told The Center Square that many businesses are skeptical about expanding and hiring new employees because of the initial costs and risks around operating a small trade. Abbrano said HB 1016 takes steps to mitigate that, as well as higher than average veteran unemployment.
According to the U.S. Department of Labor, the national veteran unemployment rate was 2.8% last month, mirroring the 2023 average; meanwhile, the nonveteran unemployment rate was 4.2%, a slight increase from the 3.7% average last year.
The state’s veteran unemployment rate is higher than the national average, sitting at 3.8% for 2023, according to the DOL, but is still lower than civilians. According to the Washington State Employment Security Department, the overall unemployment rate was 4.7% in October 2024.
However, things take a turn when considering who’s actively in the workforce. According to the U.S. Bureau of Labor Statistics, only 46.9% of all veterans over 18 years old were employed in 2023. Meanwhile, 62.8% of all nonveterans were employed last year.
“The lower employment-population ratio for veterans when compared with nonveterans reflects, in part, the fact that veterans tend to be older than nonveterans,” according to the U.S. BIL. “For example, all veterans from World War II, Korean War, and Vietnam era are now over age 65.”
According to HB 1016, an employer would lose the privilege of being able to claim new credits for a year if they fire a qualifying employee already receiving one. The only exceptions include if the person was fired for misconduct connected to their work or a felony or gross misdemeanor conviction.
Another provision would sunset the tax credit after a decade, expiring January 2037.
“Creating an inventive program to hire veterans and military families is not only good for the economy, good for small businesses, but also the right thing to do,” Abbrano wrote in a statement to The Center Square.
