Work Opportunity Tax Credit (WOTC)

The Work Opportunity Tax Credit, or WOTC, is a general business credit provided under section 51 of the Internal Revenue Code (Code) that is jointly administered by the Internal Revenue Service (IRS) and the Department of Labor (DOL). The WOTC is available for wages paid to certain individuals who begin work on or before December 31, 2025. The WOTC may be claimed by any employer that hires and pays or incurs wages to certain individuals who are certified by a designated local agency as being a member of one of 10 targeted groups. In general, the WOTC is equal to 40% of up to $6,000 of wages paid to, or incurred on behalf of, an individual who:  

• is in their first year of employment;
• is certified as being a member of a targeted group;
• and performs at least 400 hours of services for that employer.

• the formerly incarcerated or those previously convicted of a felony; 
• recipients of state assistance under part A of title IV of the Social Security Act (SSA); 
• veterans
• residents in areas designated as empowerment zones or rural renewal counties; 
• individuals referred to an employer following completion of a rehabilitation plan or program; 
• individuals whose families are recipients of supplemental nutrition assistance under the Food and Nutrition Act of 2008; 
• recipients of supplemental security income benefits under title XVI of the SSA; 
• individuals whose families are recipients of state assistance under part A of title IV of the SSA; and 
• individuals experiencing long-term unemployment.