The Work Opportunity Tax Credit (WOTC) is a federal tax credit initiative offering substantial savings for businesses hiring from specific, historically disadvantaged groups. By targeting these underemployed populations, the WOTC aims to boost their workforce participation while providing a competitive edge for participating companies.
Businesses can claim a WOTC of up to 40% of a new hire’s first-year wages, capped at $9,600 for most target groups. This translates to significant tax savings, directly offsetting a company’s federal income tax liability. The credit incentivizes companies to hire veterans, youth ages 16-24 from low-income backgrounds, unemployed individuals receiving government assistance, and more.
The WOTC delivers a win-win for both employers and employees. Companies gain access to a broader talent pool, often finding highly motivated workers eager to prove themselves. And the tax credit can offset the costs of onboarding and training, making it more feasible to give opportunities to those who may lack extensive experience but offer great potential.
The WOTC is set to expire December 31, 2025, so be sure to take advantage of this valuable incentive while you can. To find out how much your company can claim, enter your info below!