SEC. 2. EXTENSION AND IMPROVEMENT OF WORK OPPOR-
TUNITY TAX CREDIT FOR VETERANS. 
(a) CREDIT MADE PERMANENT FOR VETERANS.— 
Section 51(c)(4) of the Internal Revenue Code of 1986 
is amended by inserting ‘‘(other than a qualified veteran)’’ 
after ‘‘an individual’’. 
(b) ELECTION TO CLAIM CREDIT AS EXEMPTION 
FROM EMPLOYMENT TAXES.— 
(1) IN GENERAL.—Section 3111 of the Internal 
Revenue Code of 1986 is amended by adding at the 
end the following new subsection: 
‘‘(f) SPECIAL
EXEMPTION
FOR
CERTAIN
VET-
ERANS.— 
‘‘(1) IN
GENERAL.—Subsection (a) shall not 
apply to first-year wages paid after the date of the 
enactment of this subsection by a qualified employer 
with respect to employment of any specified veteran 
for services performed— 
‘‘(A) in a trade or business of such quali-
fied employer, or 
‘‘(B) in the case of a qualified employer ex-
empt from tax under section 501(a), in further-
ance of the activities related to the purpose or 
function constituting the basis of the employer’s 
exemption under section 501. 
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‘‘(2) LIMITATION.—With respect to any speci-
fied veteran employed by a qualified employer, the 
amount of wages to which paragraph (1) applies 
shall not exceed— 
‘‘(A) $125,490 in the case of an individual 
who is a qualified veteran by reason of section 
51(d)(3)(A)(ii)(II), 
‘‘(B) $73,203 in the case of an individual 
who is a qualified veteran by reason of section 
51(d)(3)(A)(iv), 
‘‘(C) $62,745 in the case of an individual 
who is a qualified veteran by reason of section 
51(d)(3)(A)(ii)(I), and 
‘‘(D) $31,373 in the case of any other 
qualified veteran. 
‘‘(3) QUALIFIED EMPLOYER.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘qualified 
employer’ means any employer other than the 
United States, any State, or any political sub-
division thereof, or any instrumentality of the 
foregoing. 
‘‘(B) TREATMENT
OF
EMPLOYEES
OF 
POST-SECONDARY
EDUCATIONAL
INSTITU-
TIONS.—Notwithstanding 
subparagraph 
(A), 
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the term ‘qualified employer’ includes any em-
ployer which is a public institution of higher 
education (as defined in section 101(b) of the 
Higher Education Act of 1965). 
‘‘(4) SPECIFIED
VETERAN.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘specified 
veteran’ means any individual who— 
‘‘(i) begins employment with a quali-
fied employer after the date of the enact-
ment of this subsection, 
‘‘(ii) certifies by signed affidavit, 
under penalties of perjury, that such indi-
vidual is a qualified veteran and whether 
such individual is a qualified veteran de-
scribed in subparagraph (A), (B), or (C) of 
paragraph (2), 
‘‘(iii) is not employed by the qualified 
employer to replace another employee of 
such employer unless such other employee 
separated from employment voluntarily or 
for cause, and 
‘‘(iv) is not an individual described in 
section 51(i)(1) (applied by substituting 
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‘qualified employer’ for ‘taxpayer’ each 
place it appears). 
‘‘(B) QUALIFIED
VETERAN.—The term 
‘qualified veteran’ has the meaning given such 
term by section 51(d)(3), but applied without 
regard to whether such individual has been cer-
tified by the designated local agency. 
‘‘(5) FIRST-YEAR WAGES.—For purposes of this 
subsection, the term ‘first-year wages’ means, with 
respect to any individual, wages for services ren-
dered during the 1-year period beginning with the 
day the individual begins work for the employer. 
‘‘(6) COORDINATION
WITH
CREDIT
FOR
EM-
PLOYMENT OF QUALIFIED VETERANS BY QUALIFIED 
TAX-EXEMPT
ORGANIZATIONS.—This 
subsection 
shall not apply with respect to the first-year wages 
of any individual if such wages are taken into ac-
count in determining the credit allowed under sub-
section (e). 
‘‘(7) ELECTION.—A qualified employer may 
elect to have this subsection not apply with respect 
to the first-year wages of any individual. Such elec-
tion shall be made in such manner as the Secretary 
may require.’’. 
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(2) COORDINATION WITH WORK OPPORTUNITY 
CREDIT.—Section 51(c) of such Code is amended by 
adding at the end the following new paragraph: 
‘‘(6) COORDINATION WITH PAYROLL TAX EX-
EMPTION
FOR
QUALIFIED
VETERANS.—The credit 
determined under this section with respect to any 
qualified veteran for any taxable year shall be re-
duced by an amount equal to 7.65 percent of the 
qualified first-year wages paid or incurred by the 
taxpayer to such veteran during such taxable year to 
which section 3111(e) or 3221(d) applied.’’. 
(3) COORDINATION WITH CREDIT FOR EMPLOY-
MENT OF QUALIFIED VETERANS BY QUALIFIED TAX- 
EXEMPT ORGANIZATIONS.—Section 3111(e) of such 
Code is amended by adding at the end the following 
new paragraph: 
‘‘(6) ELECTION.— 
‘‘(A) IN
GENERAL.—A qualified tax-ex-
empt organization may elect to determine the 
credit allowed under this section without regard 
to the qualified first-year wages of any indi-
vidual. 
‘‘(B) COORDINATION
WITH
EXEMPTION 
FOR
FIRST-YEAR
WAGES
OF
SPECIFIED
VET-
ERANS.—For exemption for first-year wages of 
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specified veterans to which this subsection does 
not apply, see subsection (f).’’. 
(4) TRANSFERS
TO
FEDERAL
OLD-AGE
AND 
SURVIVORS
INSURANCE
TRUST
FUND.—There are 
hereby appropriated to the Federal Old-Age and 
Survivors Trust Fund and the Federal Disability In-
surance Trust Fund established under section 201 
of the Social Security Act (42 U.S.C. 401) amounts 
equal to the reduction in revenues to the Treasury 
by reason of the amendments made by paragraph 
(1). Amounts appropriated by the preceding sen-
tence shall be transferred from the general fund at 
such times and in such manner as to replicate to the 
extent possible the transfers which would have oc-
curred to such Trust Fund had such amendments 
not been enacted. 
(5) APPLICATION
TO
RAILROAD
RETIREMENT 
TAXES.— 
(A) IN GENERAL.—Section 3221 of the In-
ternal Revenue Code of 1986 is amended by re-
designating subsection (d) as subsection (e) and 
by inserting after subsection (c) the following 
new subsection: 
‘‘(d) SPECIAL
EXEMPTION
FOR
CERTAIN
VET-
ERANS.— 
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United States, any State, or any political subdivision 
thereof, or any instrumentality of the foregoing. 
‘‘(4) SPECIFIED
VETERAN.—For purposes of 
this subsection— 
‘‘(A) IN
GENERAL.—The term ‘specified 
veteran’ means any individual who— 
‘‘(i) begins employment with a quali-
fied employer after the date of the enact-
ment of this subsection, 
‘‘(ii) certifies by signed affidavit, 
under penalties of perjury, that such indi-
vidual is a qualified veteran and whether 
such individual is a qualified veteran de-
scribed in subparagraph (A), (B), or (C) of 
paragraph (2), 
‘‘(iii) is not employed by the qualified 
employer to replace another employee of 
such employer unless such other employee 
separated from employment voluntarily or 
for cause, and 
‘‘(iv) is not an individual described in 
section 51(i)(1) (applied by substituting 
‘qualified employer’ for ‘taxpayer’ each 
place it appears). 
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‘‘(B) QUALIFIED
VETERAN.—The term 
‘qualified veteran’ has the meaning given such 
term by section 51(d)(3), but applied without 
regard to whether such individual has been cer-
tified by the designated local agency. 
‘‘(5) FIRST-YEAR
COMPENSATION.—For pur-
poses of this subsection, the term ‘first-year com-
pensation’ means, with respect to any individual, 
compensation for services rendered during the 1-year 
period beginning with the day the individual begins 
work for the employer. 
‘‘(6) ELECTION.—A qualified employer may 
elect to have this subsection not apply. Such election 
shall be made in such manner as the Secretary may 
require.’’. 
(B) TRANSFERS
TO
SOCIAL
SECURITY 
EQUIVALENT
BENEFIT
ACCOUNT.—There are 
hereby appropriated to the Social Security 
Equivalent Benefit Account established under 
section 15A(a) of the Railroad Retirement Act 
of 1974 (45 U.S.C. 231n–1(a)) amounts equal 
to the reduction in revenues to the Treasury by 
reason of the amendments made by subpara-
graph (A). Amounts appropriated by the pre-
ceding sentence shall be transferred from the 
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general fund at such times and in such manner 
as to replicate to the extent possible the trans-
fers which would have occurred to such Account 
had such amendments not been enacted. 
(c) EFFECTIVE DATES.— 
(1) IN GENERAL.—The amendments made by 
subsection (a) shall apply to individuals who begin 
work for the employer after December 31, 2014. 
(2) EXEMPTION FROM EMPLOYMENT TAXES.— 
The amendments made by subsection (b) shall apply 
to amounts paid after the date of the enactment of 
this Act. 
Æ 
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