The Work Opportunity Tax Credit (WOTC) program is a federal initiative that rewards employers with tax credits for hiring workers from targeted groups facing significant barriers to employment. These groups include veterans, ex-felons, and individuals receiving public assistance.
Employers claim the credit by submitting IRS Form 8850 within 28 days of the employee's start date. The credit amount varies based on the employee's group and hours worked. For example, employers can receive up to $9,600 for hiring a qualified long-term unemployment recipient.
The WOTC program targets 10 specific groups. Here are the most common:
| Group | Maximum Credit |
|---|---|
| Veterans | $9,600 |
| Ex-felons | $2,400 |
| Recipients of public assistance | $2,400 |
| Long-term unemployment recipients | $9,600 |
Businesses use the WOTC program to offset hiring costs while promoting diversity and inclusion. According to the U.S. Department of Labor, over 1.8 million workers have been hired under this program since 1997. Many employers find it particularly valuable for filling entry-level positions.
Some employers mistakenly believe the WOTC program is only for large corporations. In reality, businesses of all sizes-including small businesses-can participate. Another misconception is that the process is overly complex. While paperwork is required, many employers simplify it using payroll software.
I've seen firsthand how the WOTC program benefits local businesses. A restaurant owner I spoke with reduced hiring costs by $12,000 in the first year by hiring veterans and long-term unemployment recipients. The program helped them fill roles quickly while supporting their community.