What is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. The program has been extended until December 31, 2019 after President Obama signed the 2015 Tax Extenders Bill.

Who qualifies?

Any employer who does business within the US and hires employees that are from the following target groups:

  • Unemployed Veterans (including disabled veterans)
  • Temporary Assistance for Needed Families (TANF) Recipients
  • Food Stamp (SNAP) Recipients
  • Designated Community Residents (living in Empowerment Zone or Rural Renewal Counties)
  • Vocational Rehabilitation Referred Individuals
  • Ex-Felons
  • Supplemental Security Income Recipients
  • Summer Youth Employees (living in Empowerment Zones)
  • Long-term Unemployment Recipient (Effective 1/1/2016)

How much is the credit?

Depending on the employee’s target group, employers can claim up to $9,600 per employee within the first year of employment.

What is the estimated number of employees that qualify for WOTC?

10-15% of the new hires per year, but the percentage will change based on other factors.

What is the total amount of credits claimed per year?

Over $1 billion.