Peters, Ernst Introduce Tax Credit for Small Businesses Employing Military Reservists
Bill Would Help Small Businesses Provide Differential Pay to Reservists Called to Active Duty
WASHINGTON, DC – U.S. Senators Gary Peters (D-MI) and Joni Ernst (R-IA) today introduced bipartisan legislation that would extend a tax credit for small businesses that provide differential pay to military reservists and National Guard members called to serve on active duty. The Military Reserve Small Business Jobs Act of 2015 would extend the tax credit for five years, supporting small businesses and helping provide financial security for reservists and their families while on active duty. There are approximately 824,000 reservists and National Guard members in America, and 15,438 of them serve in units in Michigan. Peters is a former Lt. Commander in the Navy Reserve and Ernst continues to serve as a Lt. Colonel in the Iowa Army National Guard.
“Reservists in Michigan and across the country put their lives on the line and stand ready to protect our country,” Senator Peters said. “Our reservists should not have to worry about whether they will be able to provide for their families when called to serve our nation on active duty. This bipartisan, commonsense legislation will ensure American stands by our commitment to support our men and women in uniform as well as their families and support the small businesses that go above and beyond by providing differential pay to activated reservists.”
“Our military reservists and National Guard members in Iowa and throughout our nation stand ready to serve and deserve the peace of mind and financial security to provide for their families once they have activated,” said Senator Ernst. “This important bipartisan legislation provides a tax credit for small businesses to provide differential pay for our military reservists and National Guard members on active duty. We must support these brave men and women in uniform - and their families - who sacrifice for our nation.”
Originally enacted in 2008 as part of the bipartisan Heroes Earnings Assistance and Relief Tax Act (HEART Act), the employer wage credit for activated military reservists helps small businesses that provide differential pay to employees who have been called to active duty. This provision, Section 45P, provides a tax credit for 20% of the differential salary payment for small businesses with fewer than 50 employees. For example, if an employee’s pay at their small business employer is $3,000 per month but they make $2,000 while called up, an eligible small business would receive a $200 credit for paying them the $1,000 difference.
“NGAUS applauds the effort to make our members and their small business employers financially whole during deployments. The subject tax credit effectively does that dollar for dollar for both member and employer with a necessary benefit inuring to the families of our deployed,” said Colonel Peter J. Duffy, U.S. Army (Retired), Director of Legislative Programs for the National Guard Association of the United States. “Our employers remain perhaps the most vital part of the community support network for our members and their families.”
Senator Peters previously introduced this bipartisan legislation as a member of the U.S. House. The tax credit incentive for offering differential pay was included in a bipartisan package of tax bills that passed Congress last year, but it expired at the end of 2014.
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