The Work Opportunity Tax Credit (WOTC)
is a federal income tax credit that encourages and rewards employers who hire from nine targeted groups of job seekers.
WOTC is designed to help job seekers most in need of employment, gain on-the-job experience and move toward economic self-sufficiency. It is aimed at helping American workers and increasing American productivity and economic growth.
WOTC can reduce employer federal tax liability by as much as $2,400 per new hire.
WOTC applies to new hires that belong to one of nine WOTC target groups:
Welfare/TANF recipients (not including Medicare or Medicaid)
Veterans receiving Food Stamps
Designated Community Residents
Food Stamp recipients between the ages of 18 and 39
Supplemental Security Income recipients
Long Term TANF Recipients
On January 2, 2013, the President signed into law the American Tax Payer Relief Act of 2012, which authorizes an extension of the WOTC program:
-- Continues authorization of all veteran target groups (including those implemented under the VOW to Hire Heroes Act) until December 31, 2013.
-- Retroactively reauthorizes all WOTC non-veteran target groups, from December 31, 2011 to December 31, 2013.
-- Retroactively reauthorizes Empowerment Zones, which determines eligibility for the summer youth target group, from December 31, 2011 to December 31, 2013.
-- Does not reauthorize the Recovery Act disconnected youth and Recovery Act unemployed veteran target groups.
Information on the new legislation will be forthcoming. Interim instructions have been provided to State Workforce Agencies regarding the processing of WOTC applications.
For more information on the Work Opportunity Tax Credit, click here.
For more information on how employers can earn a Federal Income Tax Credit, view the Work Opportunity and Tax Credit brochure.