Thanksgiving will soon be here, a time for family and friends to gather around the dining room table and show appreciation for each other while celebrating with a bountiful turkey dinner and all the trimmings. And with this tradition, there is a phrase that many will hear drifting across the table…"Please pass the gravy.” As if the turkey, mashed potatoes, and stuffing aren’t enough for a succulent feast, here comes the gravy, a delicious, mouth-watering reward resulting from hours of toil preparing the feast.
In a way, you can think of Employment Incentive programs as gravy too. As a successful business with hiring needs, you are doing the hard work of providing employment opportunities to those in need of jobs. Federal and state governments recognize your hard work and contributions to local economies by "passing the gravy” in the form of tax incentives to help your business create job openings, improve the bottom line, and help new employees obtain and retain jobs.
There are many Employment Incentive programs that can help your company reduce federal and state tax liability and increase profitability. Below are five of the most popular employment incentives available to businesses.
Federal Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC) program is a federal government initiative designed to increase employment opportunities for people who typically experience certain barriers to employment, such as veterans, public assistance recipients, or ex-felons. The credit amount for the WOTC can range from $1,200 to $9,600 for each qualified new hire, depending upon the new hires' WOTC target group.
You as an employer receive a federal income tax credit that reduces your company’s federal income tax liability. The business must have a tax liability to use the credits. Unused credit can be carried back one year and carried forward for 20 years.
State Point of Hire Credits
Several states offer various hiring credits, like the federal WOTC incentive, that focus on job creation. States regularly rely on tax incentives as an economic development tool to spur job growth and retention.
Many states offer Point of Hire Employment Tax Credits that qualify employees using criteria similar to the WOTC. These credits range from a few hundred dollars, up to $35,000 per qualifying employee. At CTI, we refer to these state incentives as “WOTC Piggyback Credits” because your company can capture the state credits using the same criteria screening process that we use for the WOTC.
States with the WOTC piggyback credits includeAlabama, Alaska, Georgia, Hawaii, Illinois, Louisiana, New Mexico, New York, South Carolina, Tennessee, Washington, and West Virginia.
Georgia Job Tax Credit
The Georgia Job Tax Credit program provides a tax credit to certain eligible businesses that create net new jobs in the state. Counties in Georgia are ranked into tiers using three factors: unemployment rate, per capita income, and percentage of residents whose income is below the poverty level. Job credits are determined by county tier and meeting minimum new jobs thresholds.
Georgia Quality Jobs Tax Credit
The Georgia Quality Job Tax Credit program rewards businesses creating new jobs and paying higher than average wages. The program provides a tax credit to businesses that create at least 50 new jobs in a 12-month period. The jobs must pay wages that are at least ten percent higher than the county average wage.
Tennessee Job Tax Credit
A standard job tax credit is available for tax-paying companies that invest in Tennessee and create jobs because of the investment. To qualify, your tax-paying business must make the required capital investment of at least $500,000 within three years (or five years in a tier 3 or 4 enhancement county), and create the following minimum number of qualified jobs from the investment.
- 25 jobs in a tier 1 or 2 enhancement county
- 20 jobs in a tier 3 enhancement county
- 10 jobs in a tier 4 enhancement county
If you qualify, your business may receive a job tax credit equal to $4,500 for each qualified job.
Don’t miss a drop!
Make sure you get every drop of the gravy that you deserve! Your successful business drives prosperity for local economies and workers, and Employee Incentive programs are here to help you grow even more.
At CTI, our elite tax consultants have the knowledge and experience to identify all the incentives for which your business may qualify, from the largest federal employment credit to the smallest local programs. Reach out to our tax incentive specialists today.
Ready to discover more about the WOTC or other employment incentive opportunities? Download your complimentary, educational guide below.