Small Business Tax Credit for Paying Employees on Military Leave

U.S. small businesses are now eligible for a tax credit if they continue to pay employees who are on active duty in the military. In June, President Bush signed into law the Heroes Earnings Assistance and Relief (HEART) Tax Act of 2008.

According the National Federation of Independent Business, the new law:

"allows small business owners with fewer than 50 employees to claim a tax credit of 20 percent of wage differential payments as long as they continue to pay reservists some or all of their former compensation and the payments do not exceed $20,000."

It is difficult for a small business to lose a productive employee, and this law provides an incentive for employers to keep paying these employees while they serve in the military.