The Work Opportunity Tax Credit (WOTC) is a federal tax credit program available to employers who hire new employees from eleven “target” groups that have a particularly high unemployment rate or other special employment needs. Employers are compensated by reduced federal income tax liability.

For most target groups, the tax credit can be as much as $2,400 per eligible employee. However, two target groups allow for either a $4,800 credit in one year or $9,000 over a 2-year period combined. The tax credit amount is based on qualified wages paid to the new employee for the first year of employment. Generally, qualified wages are capped at $6,000. The credit is 25% of qualified first-year wages for those employed at least 120 hours and 40% for those employed 400 hours or more.

Presently, the tax credit is not available for employees hired after December 31, 2014. In the meantime, please consult us on the status.

The WOTC can be especially beneficial to employers in high turnover industries, such as hospitality, food and beverage, warehouse and distribution, nonprofit or manufacturing. We can consult with human resource managers, owners, and small business employers to discuss the applications of the Work Opportunity Tax Credit.