Work Opportunity Tax Credits (WOTC)

OVERVIEW

The Work Opportunity Tax Credit is a federal income tax credit for employers who hire employees from eligible groups including youth, ex-offenders, and public assistance recipients. The Small Business and Work Opportunity Act of 2007 extended the authorization of the WOTC Program through August 31, 2011. Employers may claim WOTC benefits for a total of two years for each eligible employee.

The WOTC has two purposes:

  • To promote the hiring of individuals who qualify as a member of a target group, and
  • To provide a federal tax credit to employers who hire these individuals. An employer may qualify for a tax credit of up to $9,000 if the employee is a member of a designated target group and meets that group's specific requirements.

TAX CREDITS

Businesses can reduce taxes up to $2,400 for each new adult hire, up to $1,200 for each new summer youth hire, and up to $9,000 for each new long-term family assistance recipient hired over a two- year period.

ELIGIBILITY

For-profit employers are entitled to a credit against their federal income tax liabilities for hiring members of the following eligible groups: public assistance recipients, qualified veterans, high risk youth, summer youth, ex-offenders, vocational rehabilitation participants, and supplemental security income recipients.

For more information about the federal Work Opportunity Tax Credit program, click here

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