Employment Incentives

FEATURED PROGRAMS

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 WOTC can range from $2,400 to $9,600 for each qualified new hire, depending upon the new hires WOTC target group. There are currently 14 different target categories under which an employee may qualify.

The employer receives a federal income tax credit that reduces its federal tax liability, and unused credits can be carried back one year and carried forward for 20 years.

  • Employer must have a federal tax liability to use the WOTC
  • WOTC can offset regular tax and AMT (Alternative Minimum Tax)

Reducing a company’s federal income tax liability reduces a company’s cost of doing business, and participation in the WOTC program may help fund other projects, or even assist in the expansion of your business or its service offerings. 

Estimated Annual Benefit For A Business Participating In The WOTC Program
INDUSTRY ANNUAL BENEFIT RECEIVED BY BUSINESS
100 Hires 500 Hires 1,000 Hires
Construction $17,600 $88,000 $176,000
Food & Beverage $14,400 $72,000 $144,000
Healthcare $16,000 $80,000 $160,000
Hospitality $20,800 $104,000 $208,000
Manufacturing $12,800 $64,000 $128,000
Retail $17,600 $88,000 $176,000
Staffing $12,800 $64,000 $128,000
Program Details
  • The credit is equal to a percentage of the eligible employee’s wages.
  • WOTC encourages employers to hire from specific targeted groups.
  • Employee must work at least 120 hours for employer to receive credit.
  • Maximum WOTC is generally $2,400 per employee (40% of the first $6,000) over the first year of employment. However, the Veterans with a Service-Connected Disability target group does allow for a maximum credit of $9,600.
  • Employee must complete IRS Form 8850 on or before starting the job.
  • Form 8850 must be postmarked within 28 days of start date and sent to the state Department of Labor for certification.
  • WOTC law contains a sunset date which has been amended several times over the life of the program.
  • Many states have credits that piggyback on the WOTC.

WOTC Tax Credit Calculator

All businesses that pay income tax in the U.S. qualify for the federal Work Opportunity Tax Credit (WOTC). To quickly estimate your company’s WOTC, fill out the fields below.

How to Increase Tax Savings With WOTC  Find out if your business is eligible to pursue the work opportunity tax  credit. Download Guide