The Work Opportunity Tax Credit (WOTC) is a federal tax credit designed to encourage businesses to hire individuals who face significant barriers to employment. These barriers can include being a veteran, ex-felon, receiving certain types of public assistance, or having a disability.
WOTC has been in existence since the mid-1990s, and it has been growing in popularity and impact each year. In fact, according to the Department of Labor, in 2022 over 2.6 million workers have been hired by businesses through the WOTC program.
One of the reasons why WOTC has been growing in popularity is that it provides a financial incentive for businesses to hire individuals who may be seen as risky or difficult to employ. The tax credit can be as much as $9,600 per eligible employee, which can be a significant savings for businesses that are struggling to manage their costs or need to increase their cash flow.
Another reason why WOTC is growing in popularity is that it is a win-win-win program. It’s a win for employers because they receive benefits from the tax credit to offset hiring or training costs of these candidates and often turn into incredibly loyal employees. It benefits the individuals as they now have access to employment opportunities that they may not have otherwise had as well as can help them become self-sufficient. And then finally it’s a win for the government because for every dollar they give in the form of a WOTC credit, it saves them a little over $11 on what they spend on other programs to support these candidates.
In recent years, there have been efforts to expand the WOTC program even further. In 2020, for example, Congress passed a bill that extended the WOTC through 2025. There has also been talks about adding additional target groups like veteran spouses which could lead to even more hires through the WOTC program in the coming years. There has also been discussions to make WOTC a permanent tax fixture as it is supported by both major congressional parties.
Overall, WOTC is a program that impacts people, businesses, and communities in a positive manner and if your business is not participating, reach out to Arvo so we can help you make a difference.