Learn how the Work Opportunity Tax Credit (WOTC) makes every mile more profitable
The Work Opportunity Tax Credit is a federal tax credit program established to encourage employers to hire individuals who face significant barriers to employment. Target groups eligible for the WOTC include veterans, ex-felons, long-term unemployed individuals, recipients of government assistance programs, and residents of certain economically distressed areas.
Businesses in all industries stand to benefit from smart integration of WOTC into their tax strategy, but few see profits as reliable or high as the trucking industry. In this blog, we’ll explore a few reasons why.
High eligibility rates
When a trucking firm hires employees from eligible target groups, it can claim tax credits ranging from $1,200 to $9,600 per qualified employee. These credits directly reduce the company’s federal income tax liability, leading to significant cost savings.
Businesses across all industries can expect around 20% of new hires to be eligible for WOTC. Trucking companies, however, often enjoy eligibility rates well above 20%, since they tend to hire from WOTC target groups more often than other businesses. This is especially true for trucking companies based in certain rural areas and trucking companies who recruit from certain urban areas.
Large hiring volume
Although there is a maximum credit amount businesses may claim for each WOTC-eligible new hire, no maximum overall credit amount exists. For this reason, businesses who hire in large volumes stand to gain more through WOTC than others.
According to the US Bureau of Labor Statistics, the trucking industry hires about a quarter of a million new employees each year. This number is expected to grow by 4% through 2032. Because the average WOTC employee earns their employer $2150 in tax credits, that means the IRS makes available over $500 million each year to trucking companies through WOTC.
Improved retention
Every business owner knows that low turnover rates translate to reduced recruitment and training costs for trucking firms. Although the trucking industry offers relatively high wages and relatively low barriers to entry, some companies still struggle with high turnover rates.
In this regard, WOTC offers dual benefits. Because WOTC encourages not only the hiring of disadvantaged job-seekers, but also the retention of those workers, new hires who work at least 400 hours earn the highest rates of credit. Because truckers tend to work long hours, and can receive bonuses for driving longer routes, meeting the 400-hour benchmark may not be as challenging for trucking companies as it is for businesses in other industries. What’s more is that WOTC-eligible workers have been shown to be more loyal to the business who hires them than their peers. For these reasons, trucking companies with smart WOTC programs may find that WOTC both eases their turnover costs, and raises their rate of retention.
Keep on truckin’
It’s no exaggeration to say that WOTC can be a game-changer for trucking companies. Check out how we helped a trucking company generate over $100K in profit.
What’s more is that WOTC not only benefits the trucking firms themselves but also contributes to the economic growth and social development of the communities they serve. That’s why we’re proud to have helped hundreds of businesses, including many trucking companies both large and small, claim nearly $700 million in employment tax credits like the WOTC.
Contact us today to start making every mile more profitable with WOTC.