WASHINGTON – Yesterday, the Senate unanimously passed H.R. 6081, the Heroes Earnings Assistance and Relief Tax (HEART) Act which included legislation championed by Senator John Kerry (D-Mass.). The HEART Act includes a tax credit for small businesses who pay a salary differential to employees called up for active duty. This provision was adopted from legislation introduced last year by Senators Kerry and Gordon Smith (R-Ore.), the Active Duty Military Tax Relief Act (S. 455), which would bolster military families and small businesses that employ reservists. The bill now goes to the President for signature.
“Memorial Day is a solemn occasion to remember and honor all who have sacrificed so much for our country. For Congress, it’s also a time to make sure our brave reservists sacrificing today are rewarded, not penalized, for serving our country,” said Senator Kerry, Chairman of the Committee on Small Business and Entrepreneurship. “This tax relief is one small step towards providing our troops the economic security they deserve.”
The legislation provides small businesses that employ fewer than 50 workers with a 20 percent tax credit of the salary differential they pay the reservist employee who is called up for active duty (with a maximum tax credit of $4,000). Many reservists take a pay cut when they are deployed which often places hardships on their families and businesses. The provision is effective with respect to amounts paid after date of enactment and before January 1, 2010.