To amend the Internal Revenue Code of 1986 to allow employers a credit against income tax for hiring veterans.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans' Employment Transition 
Support Act of 2007'' or the ``VETS Act of 2007''.

SEC. 2. CREDIT FOR EMPLOYERS HIRING VETERANS.

    (a) In General.--Subpart D of part IV of subchapter A of chapter 1 
of the Internal Revenue Code of 1986 (relating to business-related 
credits) is amended by adding at the end the following new section:

``SEC. 45O. CREDIT FOR EMPLOYERS HIRING VETERANS.

    ``(a) General Rule.--For purposes of section 38, the military 
service personnel employment credit for the taxable year shall be equal 
to--
            ``(1) in the case of a qualified veteran, 40 percent of the 
        qualified first-year wages with respect to such veteran for 
        such year, and
            ``(2) in the case of a qualified disabled veteran, the 
        applicable percentage of the qualified first-year wages with 
        respect to such veteran for such year.
    ``(b) Veteran Taken Into Account Only Once.--No credit shall be 
determined under subsection (a) with respect to any veteran unless such 
veteran has elected (in such form and manner as the Secretary may 
require) to have his qualified first-year wages taken into account with 
respect to the employer paying such wages. A veteran may make only one 
election under this subsection. The Secretary shall require such 
reporting as the Secretary determines is necessary to carry out the 
purposes of this subsection.
    ``(c) Qualified Wages.--For purposes of this section--
            ``(1) In general.--The term `qualified wages' means, with 
        respect to any individual, the wages paid or incurred by the 
        employer during the taxable year to such individual.
            ``(2) Qualified first-year wages.--The term `qualified 
        first-year wages' means, with respect to any individual, 
        qualified wages attributable to service rendered during the 1-
        year period beginning with the day the individual begins work 
        for the employer.
            ``(3) Wages.--The term `wages' has the meaning given such 
        term by section 51(c), without regard to paragraph (4) thereof.
    ``(d) Qualified Veteran; Hiring Date.--For purposes of this 
section--
            ``(1) Qualified veteran.--The term `qualified veteran' 
        means any individual who is certified by the designated local 
        agency (as defined in section 51(d)(11)) as being a veteran (as 
        defined in section 51(d)(3)(B)).
            ``(2) Hiring date.--The term `hiring date' has the meaning 
        given such term by section 51(d).
    ``(e) Qualified Disabled Veteran; Applicable Percentage.--
            ``(1) In general.--The term `qualified disabled veteran' 
        means any qualified veteran who is certified by the designated 
        local agency (as defined in section 51(d)(11)) as having a 
        disability that has been determined under the laws administered 
        by the Secretary of Veterans Affairs to be service-connected 
        and that is rated by such Secretary (as of the date of the 
        certification) as 10 percent or more disabling.
            ``(2) Applicable percentage.--The term `applicable 
        percentage' means the percentage determined in accordance with 
        the following table:

 
 
 
``Percentage of disability:         Applicable percentage:
At least 10 but not over 20.......  41
At least 20 but not over 30.......  42
At least 30 but not over 40.......  43
At least 40 but not over 50.......  44
At least 50 but not over 60.......  45
At least 60 but not over 70.......  46
At least 70 but not over 80.......  47
At least 80 but not over 90.......  48
At least 90 but not over 100......  49
100 percent.......................  50

    ``(f) Certain Rules To Apply.--Rules similar to the rules of 
section 52, and subsections (d)(11), (f), (g), (i) (as in effect on the 
day before the date of the enactment of the Taxpayer Relief Act of 
1997), (j), and (k) of section 51, shall apply for purposes of this 
section.
    ``(g) Coordination With Work Opportunity Credit.--The credit 
allowed under this section with respect to any qualified first-year 
wages shall be in addition to any credit allowed under section 51 with 
respect to such wages.''.
    (b) Credit To Be Part of General Business Credit.--Subsection (b) 
of section 38 of such Code is amended by striking ``plus'' at the end 
of paragraph (30), by striking the period at the end of paragraph (31) 
and inserting ``, plus'', and by adding at the end the following new 
paragraph:
            ``(32) the military service personnel employment credit 
        determined under section 45O(a).''.
    (c) Technical Amendments.--
            (1) Clause (iii) of section 41(b)(2)(D) of such Code is 
        amended to read as follows:
                            ``(iii) Exclusion for wages to which 
                        employment credits apply.--The term `wages' 
                        shall not include any amount taken into account 
                        in determining the credit under section 45O(a) 
                        or 51(a).''.
            (2) Subparagraph (B) of section 45A(b)(1) of such Code is 
        amended to read as follows:
                    ``(B) Coordination with other employment credits.--
                The term `qualified wages' shall not include wages 
                attributable to service rendered during the 1-year 
                period beginning with the day the individual begins 
                work for the employer if any portion of such wages is 
                taken into account in determining the credit under 
                section 45O or 51.''.
            (3) Subsection (a) of section 280C of such Code is amended 
        by inserting ``45O(a),'' after ``45A(a),''.
            (4) Paragraph (3) of section 1396(c) of such Code is 
        amended to read as follows:
            ``(3) Coordination with other employment credits.--
                    ``(A) In general.--The term `qualified wages' shall 
                not include wages taken into account in determining the 
                credit under section 45O or 51.
                    ``(B) Coordination with paragraph (2).--The $15,000 
                amount in paragraph (2) shall be reduced for any 
                calendar year by the amount of wages paid or incurred 
                during such year which are taken into account in 
                determining the credits under sections 45O and 51.''.
    (d) Clerical Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by adding 
at the end the following new item:

``Sec. 45O. Credit for employers hiring veterans.''.
    (e) Effective Date.--The amendments made by this section shall 
apply to individuals who begin work for the employer after the date of 
the enactment of this Act.

Summary: Veterans' Employment Transition Support Act of 2007 or the VETS Act of 2007 - Amends the Internal Revenue Code to allow employers a general business tax credit for hiring certain veterans certified by designated local agencies as having served on active duty (other than for training) in the Armed Forces for a period of more than 180 days or having been discharged or released from active duty for a service-connected disability. Sets the amount of such credit at 40% of the first-year wages of such veterans and increases the percentage of such credit for disabled veterans based upon their disability ratings.