Work Opportunity Tax Credit
What is the purpose of this resource?
The Department of Career Services (DCS) oversees a number of labor and workforce development programs including the Work Opportunity Tax Credit (WOTC) program. WOTC is a federal income tax credit incentive provided to private sector employers. An employer may be eligible for WOTC when they hire and retain veterans and individuals from other target groups with significant barriers to employment. The WOTC tax credit is a one‐time tax credit for each new hire – and there is no limit to the number of new hires who can qualify an employer for a tax credit. The requirements for this program are set by the Internal Revenue Service and the U.S. Department of Labor, Employment and Training Administration. Employers claim about $1 billion in tax credits each year under the
What benefits or services are offered by this resource to employers?
The tax credit employers can claim depends on the target group of the individual hired, the wages paid to that individual in the first year of employment, and the number of hours that individual worked. The maximum tax credit for each target group ranges from $1,200 to $9,600, depending on the employee hired.
Only for the Long term Temporary Assistance for Needy Families (TANF) target group, the credit is available to employers who hire members of this group for a two‐year period.
- In the first year, employers may claim a tax credit equal to:
- 25% of the first‐year wages, up to the maximum tax credit, if the individual works at
- 40% of the first‐year wages, up to the maximum tax credit, if the individual works at
- In the second year, employers may claim a tax credit equal to:
- 25% of the second‐year wages, up to the maximum tax credit, if the individual works
- 50% of the second‐year wages, up to the maximum tax credit, if the individual works
Who is eligible for these benefits and services?
Businesses that hire individuals from these target groups:
SNAP (Food Stamp) Recipients,
Designated Community Residents (living in Empowerment Zones/Rural Renewal Counties),
Vocational Rehabilitation Referral,
Supplemental Security Income Recipients, or
Summer Youth Employee (living in Empowerment Zones).
WOTC policies and requirements include:
Not retroactive for current Employees.
Must be “New” Employee ‐ Not a Rehire.
Time sensitive ‐ 28 Days from start date.
Target Group Eligibility Definitions:
A veteran who is:
Please note that to be considered a veteran eligible for WOTC, an individual must meet these two standards:
Long‐term Temporary Assistance for Needy Families (TANF) Recipient:
You may be eligible for this federal tax credit
To find out how you qualify, contact a Business Service Representative before you hire and for additional information
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