Congress Passes Repeal of 3% Withholding and Provides Tax Credits for Hiring Unemployed Veterans
By an overwhelming bi-partisan vote, the U.S. Congress passed legislation (H.R. 674) yesterday which repeals a 2005 law that imposes a 3% income tax withholding on government contractor payments in excess of $10,000. The very unpopular withholding provisions were scheduled to become effective at the end of next year. Also, included in the new legislation are tax credits for employers who hire previously unemployed veterans. The tax credits range from $2,400 if the newly-hired veteran was unemployed for at least four weeks, but less than six months, to $5,600 for veterans unemployed for more than six months. Another credit of $9,600 is available for hiring unemployed veterans with service-connected disabilities who were unemployed for at least six months. President Obama is expected to sign the legislation this week or early next week.