New Hiring Credit for Underserved Communities: A Smart Move for Your Business in 2025
The July 2025 tax bill introduced several new provisions to support small businesses, and one of the most impactful is a new hiring credit designed to encourage job creation in underserved communities. If you're planning to grow your team, this credit could offer meaningful tax savings while also helping to drive positive change in your community.
What Is the New Hiring Credit?
The new hiring credit provides businesses with a federal tax credit of up to $5,000 per eligible employee hired from a designated underserved or economically distressed community. The goal of the credit is to incentivize businesses to create opportunities where they’re needed most, while also rewarding employers who expand their workforce responsibly.
Who Qualifies for the Credit?
To qualify, employers must hire individuals who reside in federally designated underserved areas, such as Opportunity Zones, low-income neighborhoods, or regions with historically high unemployment. Additional eligibility may apply based on the employee's background or participation in workforce development programs.
Employers must also meet basic requirements such as:
- Paying qualifying wages
- Retaining the employee for a minimum period (e.g., 6–12 months)
- Providing documentation to support the employee’s eligibility
How Much Can You Save?
The credit can be worth up to $5,000 per eligible employee, depending on wages paid and hours worked. If you hire several qualifying individuals, the savings can quickly add up, potentially reducing your tax liability by tens of thousands of dollars.
Why This Credit Matters
Beyond the tax savings, the hiring credit gives businesses a chance to make a real difference by providing jobs where they’re needed most. It also aligns with broader ESG (Environmental, Social, and Governance) goals that more clients and stakeholders are prioritizing.
Combined with other hiring or wage-based credits, this incentive can be part of a broader workforce development strategy.
Get Ahead with Smart Hiring
If you’re considering expanding your team, this credit makes now an excellent time to hire intentionally. The key is proper planning—identifying qualifying candidates, tracking eligibility, and maintaining the necessary documentation.
Let us help you design a tax-smart hiring strategy that fits your goals and meets the new federal requirements. Reach out to our team to learn how this credit can fit into your 2025 tax plan.