Military Incentive Programs
The Military Incentive Program (MIP) Act of 1991 created an employer tax incentive program designed to promote the employment of West Virginia Veterans, reservists, and National Guard Members. By providing tax credits to private-sector employers who employ eligible veterans, West Virginia recognizes the service to the nation these people provide and promotes a preference for hiring in the private sector. Application by perspective employee must be completed prior to hire.
Tax credits are based on a percentage of the first $5,000 in wages paid to the individual after one continuous year of employment. Employers may claim a 30 percent tax credit for hiring economically disadvantaged Korean conflict and Vietnam era veterans, 25 percent for unemployed members of the Guard and Reserves, or may claim a credit ranging from 10 to 100 percent for disabled veterans. The actual percentage is equal to the percent of service-connected disability compensable by Veterans Affairs for disabled Veterans. For example, an employer who hires an economically disadvantaged Korean conflict veteran may claim a tax credit equal to 30 percent of the first $5,000 in wages paid to the veteran after one year of employment, or a maximum of $1,500. If, however, the employer hires a 100 percent disabled veteran, the maximum tax credit would be $5,000. The hiring of an unemployed National Guard or Reserves member would offer a maximum $1,250 tax credit to the employer.
Which taxes are applicable under this tax credit?
The MIP credit may be applied against the personal income tax liability of proprietorship or partnership employers, or the corporate net income taxes by corporations.
Are there any limitations on using the tax credit?
Yes. An employer can only claim the credit against taxes which the employer is required to pay to the state of West Virginia. The tax credit cannot be applied against West Virginia unemployment compensation taxes. Taxes may not be assigned. Taxes may not exceed the employer’s total tax liability with respect to the specific tax against which the tax credit is required to be applied.
How long must the individual work before the credit can be applied?
One year. The employer cannot claim the tax credit until the individual has been employed for one continuous year, unless the individual voluntarily leaves the job, becomes totally disabled and cannot work, or is terminated for good cause shown. If one of these conditions exists, the employer may be eligible to claim a partial tax credit.
Does the program require time-consuming paperwork?
No. This program is designed to eliminate red tape. The individual is responsible for presenting a voucher of eligibility to prospective employers. Employers are responsible for:
- ensuring the voucher has been certified by the local WorkForce West Virginia office;
- completing the employer declaration with such basic information as date employed, job title, wages paid, employer tax number and other identifying information, and signing and returning the voucher within five working days of hire date to the Job Service office which issued the voucher;
- claiming the tax credit at the time income taxes are filed (after receiving the employer certificate from Job Service, and after the individual has been employed one year).
For Instructions and Forms click here.