--- kind: "section" citation: "26 U.S.C. § 45P" title: "26" title_heading: "Internal Revenue Code" number: "45P" heading: "Employer wage credit for employees who are active duty members of the uniformed services" release: "119-102" date: "2026-07-12" url: "https://uscodex.org/usc/26/45P" units: - "Subtitle A — Income Taxes" - "Chapter 1 — Normal Taxes and Surtaxes" - "Subchapter A — Determination of Tax Liability" - "Part IV — Credits Against Tax" - "Subpart D — Business Related Credits" --- # §45P. Employer wage credit for employees who are active duty members of the uniformed services - (a) **General rule—** For purposes of [section 38](/usc/26/38.md), the [differential wage payment](/usc/26/414.md?p=u-12-D) credit for any taxable year is an amount equal to 20 percent of the sum of the eligible [differential wage payments](/usc/26/414.md?p=u-12-D) for each of the qualified [employees](/usc/26/430.md?p=c-7-D-vi) of the [taxpayer](/usc/26/1313.md?p=b) during such taxable year. - (b) **Definitions—** For purposes of this section— - (1) **Eligible differential wage payments—** The term “eligible [differential wage payments](/usc/26/414.md?p=u-12-D)” means, with respect to each qualified [employee](/usc/26/430.md?p=c-7-D-vi), so much of the [differential wage payments](/usc/26/414.md?p=u-12-D) (as defined in [section 3401(h)(2)](/usc/26/3401.md?p=h-2)) paid to such [employee](/usc/26/430.md?p=c-7-D-vi) for the taxable year as does not exceed $20,000. - (2) **Qualified employee—** The term “qualified [employee](/usc/26/430.md?p=c-7-D-vi)” means a person who has been an [employee](/usc/26/430.md?p=c-7-D-vi) of the [taxpayer](/usc/26/1313.md?p=b) for the 91-day period immediately preceding the period for which any [differential wage payment](/usc/26/414.md?p=u-12-D) is made. - (3) **Controlled groups—** All persons treated as a single employer under subsection [(b)](/usc/26/414.md?p=b), [(c)](/usc/26/414.md?p=c), [(m)](/usc/26/414.md?p=m), or [(o)](/usc/26/414.md?p=o) of section 414 shall be treated as a single employer. - (c) **Coordination with other credits—** The amount of credit otherwise allowable under this chapter with respect to [compensation](/usc/26/414.md?p=n-5-C-iii) paid to any [employee](/usc/26/430.md?p=c-7-D-vi) shall be reduced by the credit determined under this section with respect to such [employee](/usc/26/430.md?p=c-7-D-vi). - (d) **Disallowance for failure to comply with employment or reemployment rights of members of the reserve components of the Armed Forces of the United States—** No credit shall be allowed under [subsection (a)](#a) to a [taxpayer](/usc/26/1313.md?p=b) for— - (1) any taxable year, beginning after the date of the enactment of this section, in which the [taxpayer](/usc/26/1313.md?p=b) is under a final order, judgment, or other process issued or required by a district court of the [United States](/usc/26/993.md?p=g) under [section 4323 of title 38](/usc/38/4323.md) of the United States Code with respect to a violation of [chapter 43](/usc/26/chstD/ch43.md) of such title, and - (2) the 2 succeeding taxable years. - (e) **Certain rules to apply—** For purposes of this section, rules similar to the rules of subsections [(c)](/usc/26/52.md?p=c), [(d)](/usc/26/52.md?p=d), and [(e)](/usc/26/52.md?p=e) of section 52 shall apply. ## Source credit (Added Pub. L. 110–245, title I, § 111(a), June 17, 2008, 122 Stat. 1634; amended Pub. L. 111–312, title VII, § 736(a), Dec. 17, 2010, 124 Stat. 3318; Pub. L. 112–240, title III, § 308(a), Jan. 2, 2013, 126 Stat. 2329; Pub. L. 113–295, div. A, title I, § 118(a), Dec. 19, 2014, 128 Stat. 4015; Pub. L. 114–113, div. Q, title I, § 122(a), (b), Dec. 18, 2015, 129 Stat. 3052.) ## Notes ### Editorial Notes ### References in Text The date of the enactment of this section, referred to in subsec. (d)(1), is the date of the enactment of Pub. L. 110–245, which was approved June 17, 2008. ### Amendments 2015—Subsec. (a). Pub. L. 114–113, § 122(b)(1), struck out “, in the case of an eligible small business employer” after “section 38”. Subsec. (b)(3). Pub. L. 114–113, § 122(b)(2), amended par. (3) generally. Prior to amendment, par. (3) defined “eligible small business employer”. Subsec. (f). Pub. L. 114–113, § 122(a), struck out subsec. (f). Text read as follows: “This section shall not apply to any payments made after December 31, 2014.” 2014—Subsec. (f). Pub. L. 113–295 substituted “December 31, 2014” for “December 31, 2013”. 2013—Subsec. (f). Pub. L. 112–240 substituted “December 31, 2013” for “December 31, 2011”. 2010—Subsec. (f). Pub. L. 111–312 substituted “December 31, 2011” for “December 31, 2009”. ### Statutory Notes and Related Subsidiaries ### Effective Date of 2015 Amendment Pub. L. 114–113, div. Q, title I, § 122(c), Dec. 18, 2015, 129 Stat. 3052, provided that: Extension.—The amendment made by subsection (a) [amending this section] shall apply to payments made after December 31, 2014. Modification.—The amendments made by subsection (b) [amending this section] shall apply to taxable years beginning after December 31, 2015.” ### Effective Date of 2014 Amendment Pub. L. 113–295, div. A, title I, § 118(b), Dec. 19, 2014, 128 Stat. 4015, provided that: “The amendment made by this section [amending this section] shall apply to payments made after December 31, 2013.” ### Effective Date of 2013 Amendment Pub. L. 112–240, title III, § 308(b), Jan. 2, 2013, 126 Stat. 2329, provided that: “The amendment made by this section [amending this section] shall apply to payments made after December 31, 2011.” ### Effective Date of 2010 Amendment Pub. L. 111–312, title VII, § 736(b), Dec. 17, 2010, 124 Stat. 3318, provided that: “The amendment made by this section [amending this section] shall apply to payments made after December 31, 2009.” ### Effective Date Section applicable to amounts paid after June 17, 2008, see section 111(e) of Pub. L. 110–245, set out as an Effective Date of 2008 Amendment note under section 38 of this title.