# Plain Language Summary: Veteran Entrepreneurs Act of 2021

This bill creates a tax break for veterans who buy franchises. When a veteran pays the upfront fee to start a franchise business (like buying into a McDonald's or other franchise), they can get back 25 percent of that fee as a tax credit. For example, if a veteran pays $100,000 to buy a franchise, they could reduce their taxes by $25,000. However, there's a cap—the credit can't exceed $400,000 in franchise fees, which means the maximum tax credit would be $100,000.

The credit gets smaller if the franchise isn't completely owned by veterans. If a veteran only owns part of the franchise and a non-veteran owns the rest, the tax credit shrinks proportionally. So if a veteran owns 50 percent of a franchise, they'd only get 50 percent of the credit they'd otherwise receive. Interestingly, a veteran's spouse is treated as a veteran for this purpose, so a couple could potentially own 100 percent together and get the full credit. Veterans also have the option to transfer their tax credit to the franchise company in exchange for a discount on the franchise fee instead of claiming it on their taxes.

The bill applies to veterans who were discharged under honorable conditions and paid franchise fees starting in 2021. The Small Business Administration and Department of Veterans Affairs are required to spread the word about this program through mailings and brochures to veteran organizations. This is essentially the government helping veterans reduce the financial burden of starting their own franchise business by giving them a tax break on the initial startup costs.

Veteran Entrepreneurs Act of 2021

Brownley, Julia

Veteran Entrepreneurs Act of 2021 This bill allows a business-related tax credit&nbsp;of 25% of up to $400,000 of the&nbsp;franchise fees paid or incurred by an eligible veteran&nbsp;for the purchase of a franchise. The bill reduces the amount of such credit if the veteran does not own 100% of the stock or capital or profits interest of the franchisee. An eligible veteran is a person who served in the active military, naval, or air service; was discharged or released under conditions other than dishonorable; and who pays or incurs a franchise fee in connection with a franchise agreement with a franchisor. The veteran may elect to transfer the credit to an eligible franchisor in exchange for a discount in the franchise fee commensurate with the value of the credit. The Small Business Administration and the Department of Veterans Affairs must provide information about the tax credit allowed by this bill to veterans service organizations and veteran advocacy groups.