Tax Incentives for Employers

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that extends and modifies the WOTC Program and the Empowerment Zones. In summary, the PATH Act:

  • Retroactively reauthorizes the WOTC program target groups for a five-year period, from December 31, 2014 to December 31, 2019.
  • Extends the Empowerment Zones for a two-year period, from December 31, 2014 to December 31, 2016.
  • Introduces a new target group, Qualified Long-term Unemployment Recipients, for new hires that begin to work for an employer on or after January 1, 2016 through December 31, 2019.
What is WOTC?

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment. WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers. What does WOTC do? WOTC helps targeted workers move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are able to reduce their income tax liability. How large is the tax credit? The maximum tax credit ranges from $1,200 to $9,600, depending on the employee hired.

WOTC Targeted Groups:

  • Qualified Temporary Assistance to Needy Families Recipients
  • Qualified Veterans/Disabled Veterans/ Unemployed Veterans
  • Qualified Ex-felons
  • Qualified Designated Community Residents (residing in an Empowerment Zone)
  • Qualified Vocational Rehabilitation Referrals
  • Qualified Summer Youth (residing in an Employment Zone)
  • Qualified Food Stamp Recipients
  • Qualified Supplemental Security Income Recipients
  • Qualified Long-term Family Assistance Recipients
  • Qualified Long-term Unemployment Recipients

For job applicants who appear eligible, employers must submit a physical (mail) or electronic (online) application, a Pre-Screening Notice and Certification Request for the Work Opportunity Credit within 28 days of the employee’s employment start date.

You company may be eligible for additional tax credits. To learn how your company can benefit, click here.