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Abstract The goal of this paper is to show that valuation theory and Hopf theory are compatible on the class of generalized permutahedra. We prove that the Hopf structure $$\textbf {GP}^+$$ on these polyhedra descends, modulo the inclusion-exclusion relations, to an indicator Hopf monoid $$\mathbb {I}(\textbf {GP}^+)$$ of generalized permutahedra that is isomorphic to the Hopf monoid of weighted ordered set partitions. This quotient Hopf monoid $$\mathbb {I}(\textbf {GP}^+)$$ is cofree. It is the terminal object in the category of Hopf monoids with polynomial characters; this partially explains the ubiquity of generalized permutahedra in the theory of Hopf monoids. This Hopf theoretic framework offers a simple, unified explanation for many new and old valuations on generalized permutahedra and their subfamilies. Examples include, for matroids: the Chern–Schwartz–MacPherson cycles, Eur’s volume polynomial, the Kazhdan–Lusztig polynomial, the motivic zeta function, and the Derksen–Fink invariant; for posets: the order polynomial, Poincaré polynomial, and poset Tutte polynomial; for generalized permutahedra: the universal Tutte character and the corresponding class in the Chow ring of the permutahedral variety. We obtain several algebraic and combinatorial corollaries; for example, the existence of the valuative character group of $$\textbf {GP}^+$$ and the indecomposability of a nestohedron into smaller nestohedra.