A BILL IN CONGRESS COULD GIVE EMPLOYERS A TAX CREDIT TO HIRE MILITARY SPOUSES

Military spouses are undoubtedly one of the most underutilized talent pools available for hire. They’re also the most likely demographic to tell you how tired they are of being so resilient. They’re masters of chaos and known for their superior resiliency to life’s most challenging moments. No one ever asked a military spouse if they wanted to be so famously resilient. Being resilient without another option kind of takes the fun out of humbly bragging about how resilient you are.

Military spouses may very well know what it means to start over better than any other demographic. A new duty station can mean leaving a job you worked years to build, saying goodbye to professional networks, and entering a job market where employers may know little about your experience. The cycle repeats every time the military sends their family somewhere new. At the same time, no matter how many relocations they’ve conquered, it’s not something that gets easier, it gets monotonous and tiring. Most military spouses wouldn’t choose to give up their career to start all over somewhere else.

The numbers behind that reality are concerning. Blue Star Families surveys thousands of military households each year about employment, finances, and quality of life, and found that 23% of active-duty military spouses were unemployed in its 2025 Military Family Lifestyle Survey. Among spouses who were working, about 70% reported some level of underemployment, meaning they were working below their experience level, desired hours, or earning potential.

The BSF Survey also showed that military spouse employment ranked as the top issue of concern for active-duty family respondents, cited by 50% of families surveyed. Congress has introduced a bill aimed at one part of that problem, the hiring incentives employers face. The proposal is called the Military Spouse Hiring Act. But the tax credit the bill seeks to expand is currently expired.

What the Military Spouse Hiring Act Would Do

The Military Spouse Hiring Act would expand a federal hiring incentive known as the Work Opportunity Tax Credit, (WOTC), to include eligible military spouses.

The legislation was introduced in March 2023, H.R. 2033 in the House of Representatives and S. 1027 in the Senate. The bill would add “qualified military spouses” as a target group under the Work Opportunity Tax Credit, allowing employers who hire eligible spouses to claim the same hiring incentive currently available for certain Veterans and other workers facing employment barriers.

Supporters say improving military spouse employment opportunities could also strengthen military retention. When announcing the legislation, Sen. Tim Kaine of Virginia said employment instability among military families can influence whether service members remain in the military.

“Military spouses face financial instability that can cause servicemembers to leave even if they want to continue serving,” Kaine said.

The proposal would not create a new tax credit. Instead, it would expand an existing one, except - well, it’s expired.

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What the Work Opportunity Tax Credit Is

The Work Opportunity Tax Credit is a federal hiring incentive created by Congress in 1996 to encourage employers to hire workers from groups that historically face barriers to employment. Employers who hire eligible workers can claim a tax credit based on a portion of the employee’s first-year wages.

According to the Internal Revenue Service, employers can generally claim a credit equal to 40% of up to $6,000 in wages, meaning a maximum credit of $2,400 per qualifying hire when employees meet minimum work-hour thresholds.

Employers must submit certification paperwork, typically IRS Form 8850, to their state workforce agency within 28 days of the employee’s start date. The tax credit applies only to specific groups defined in federal law.

These “target groups” currently include:

• Certain Veterans, including disabled Veterans and Veterans receiving SNAP benefits
• Recipients of Supplemental Nutrition Assistance Program (SNAP) benefits
• Individuals receiving Temporary Assistance for Needy Families (TANF)
• Recipients of Supplemental Security Income (SSI)
• People hired after release from prison following felony convictions
• Individuals experiencing long-term unemployment
• Residents of certain economically distressed communities
• Vocational rehabilitation referrals

The Military Spouse Hiring Act would add military spouses as another target group under this existing program.

Why Employers Sometimes Hesitate to Hire Military Spouses

Frequent relocation is one reason military spouses face employment instability. But relocation can also influence employer hiring decisions. Companies that invest time and resources in onboarding and training may worry that military families could receive new orders and move again within a few years. Supporters of the Military Spouse Hiring Act argue that attaching a federal tax incentive to military spouse hiring could help offset that perceived risk.

A team of legal analysts at Ogletree Deakins, a national employment law firm, note that frequent relocations can make hiring and retaining military spouses more difficult. Expanding the Work Opportunity Tax Credit, the firm wrote, could encourage businesses to tap what it described as an “underutilized talent pool.”

Why the Bill Has Not Moved Forward

In 2026, public analysis of the proposal has focused heavily on the status of the Work Opportunity Tax Credit itself, which the Military Spouse Hiring Act would expand.

However, the Work Opportunity Tax Credit expired for new hires beginning January 1, 2026, after Congress allowed the program to lapse at the end of 2025.

Because the Military Spouse Hiring Act expands that credit, the proposal cannot take effect unless Congress first restores or extends the WOTC program. Tax provisions like WOTC are often handled through broader tax extenders legislation, where multiple expiring tax credits are renewed together.

What Happens Next?

For the Military Spouse Hiring Act to take effect, Congress would need to take two steps. First, lawmakers would need to restore or extend the Work Opportunity Tax Credit itself. Second, Congress would need to pass legislation adding military spouses as a target group under that program, allowing employers to claim the credit when hiring eligible spouses.

Tax provisions like WOTC are often renewed as part of broader tax extenders packages, which bundle multiple expiring tax provisions into a single bill.

Until Congress takes action, the hiring incentive that the Military Spouse Hiring Act seeks to expand remains inactive, stuck in the system. The real question for military spouses is whether employers will ever treat military life as something to plan for instead of a reason to pass on the opportunity to work with them.

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