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Congress is currently considering legislation related to the reauthorization of the federal Work Opportunity Tax Credit (WOTC). As employers may have questions about the timing and implications of this process, it is important to provide clear context and practical guidance.
While Congress has not yet completed reauthorization, the WOTC program has historically been renewed following temporary lapses. During these periods, employers are advised to continue normal screening and filing practices.
Why Reauthorization Happens
The WOTC program was intentionally designed by Congress to require periodic reauthorization. Since its creation in 1996, the program has been successfully renewed more than a dozen times. In several instances, renewals occurred after short legislative gaps caused by negotiations over unrelated legislation.
These brief hiatuses are a known feature of the program’s legislative history and do not require employers to alter their participation.
What Employers Should Do Right Now
During temporary reauthorization gaps, state workforce agencies instruct employers to continue screening all new hires and to submit WOTC applications on time, just as they would under normal circumstances. This ensures that eligible hires remain fully documented and properly positioned for certification once reauthorization is finalized.
There is no recommendation to pause or modify WOTC screening or filing activity.
WOTC Planet continues to operate as usual and is closely monitoring legislative developments. Employers will be informed as new information becomes available.
Reauthorization — Frequently Asked Questions
- What does “reauthorization” mean for the WOTC program?
The Work Opportunity Tax Credit is a federal program that Congress periodically renews through legislation. This structure has been part of the program since its creation in 1996 and is intentional. Reauthorization allows Congress to extend the program for additional years.
. - Has WOTC ever lapsed or been temporarily delayed before?
Yes. Since 1996, WOTC has been renewed more than a dozen times. Several of those renewals occurred after brief gaps caused by broader legislative negotiations unrelated to WOTC itself. These short delays are not unusual.
. - What is the current status of WOTC reauthorization?
Congress has not yet completed reauthorization. Historically, the WOTC program has been renewed following temporary lapses, and employers are advised to continue normal screening and filing practices during this period.
. - Should employers stop screening new hires for WOTC during this period?
No. During temporary reauthorization gaps, state workforce agencies instruct employers to continue screening all new hires and to timely submit WOTC applications, just as they would under normal circumstances.
. - Will WOTC applications submitted during the hiatus still be valid?
Yes. Continuing to screen and submit applications ensures that eligible hires are fully documented and properly positioned for certification once reauthorization is finalized.
. - Does this affect previously certified or claimed WOTC credits?
No. Credits that have already been certified or claimed are not affected by the reauthorization timing.
. - What should employers do right now?
No changes to standard WOTC procedures are recommended at this time.
Employers should:- Continue screening all eligible new hires
- Continue submitting WOTC applications within required timeframes
- Maintain normal onboarding and documentation practices
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- How will employers be updated as Congress moves forward?
WOTC Planet is monitoring legislative developments closely and will provide updates as new information becomes available.
. - Will WOTC Planet continue operating and supporting employers as usual during this period?
Yes! WOTC Planet will continue normal operations without interruption. All screening, application processing, monitoring, and employer support services will proceed as usual. There are no changes to workflows, service levels, or employer responsibilities during the reauthorization period.
Final Reassurance
State WOTC agencies encourage employers to continue their WOTC participation without interruption. Temporary reauthorization gaps are a known and recurring aspect of the program’s legislative history. By continuing to screen new hires and submit applications on time, employers preserve eligibility, ensuring qualifying credits are not missed once reauthorization is finalized.
WOTC Planet will continue operating as usual and remains actively engaged in monitoring developments and supporting employers throughout this process.
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- What does “reauthorization” mean for the WOTC program?
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United States Representative State Cohen (Democrat from Tennessee) and Senator Jon Ossoff (Democrat from Georgia) recently introduced a bill within their respective houses, encouraging the opening of new grocery stores in “underserved areas.” The legislation would provide tax new incentives for grocers that offer consumers fresh fruits, vegetables, meat, and dairy in those areas.
Read more: Fresh Food Act of 2024 Would Increase the Value of WOTC for Some GrocersThe Fresh Food Act’s tax reductions are potentially three-fold. It includes a tax credit based on the business’ wholesale cost of qualifying fresh-food products, such as fruits, vegetables, meat and dairy. It would offer an additional tax incentive to grocers who source those products locally. Of most interest to us, however, is the bill’s proposal for increasing the Work Opportunity Tax Credit (WOTC).
The WOTC tax credit amount is calculated based on an amount of qualified wages as specified by the US Tax Code. The maximum amount of wage used in that calculation varies for each employee, depending on why the employee qualified for WOTC. For most WOTC-certified employees, the maximum qualified wage is $6,000. For certain qualifying military veterans, the maximum qualified wage is $12,000, $14,000 or $24,000 — again depending on the circumstances that qualified the veteran.
The Fresh Food Act of 2024 would increase by $1,000 the maximum qualifying first-year wage for each category. Since the tax credit is calculated as 40 percent of the qualifying first-year wage, this amounts to an increase of $400 in tax credit per qualifying hire. Of note, the increase in qualified wage would not affect WOTC Target Group I (long term family assistance recipients).
The increased WOTC benefit would be applicable to wages paid during taxable years that begin between the dates January 1, 2025, and December 31, 2030, inclusive.
Click here to read the text of this bill.
For Senator Ossoff’s “one pager” summarizing the proposal, click here.
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I am happy to repeat some good news for employers whose hiring checklist includes the Work Opportunity Tax Credit (WOTC). The International Franchise Association was recently in Washington, DC, for its 2024 annual advocacy summit. More than 300 members attended the event, during which advocates met with members of Congress to push the organization’s tax agenda.
WOTC was one of three key tax cuts the association promoted.
Click here to read more about the IFA’s summit in a recent article by Mary Vinnedge published by Franchise Wire.
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In a press release, U.S. Representative Don Beyer (D, VA) announced he has assumed primary sponsorship of the Military Spouse Hiring Act. Former Representative Antonio Delgado (D, NY) introduced the current version of the bill but has now left the House of Representatives to serve as New York’s Lieutenant Governor.
Read the press release here.
The Military Spouse Hiring Act proposes an expansion of the Work Opportunity Tax Credit or WOTC. This bill would expand WOTC by adding a new target group known simply as “Qualified Military Spouse.”
To qualify, an eligible employee must (in the usual way) be “certified . . . as being (as of the hiring date) a spouse of a member of the Armed Forces of the United States.”
The bill does not address the meaning of “spouse,” but this term generally means an individual who is lawfully married. If passed, it will create the first WOTC target group to specifically benefit active military families.
This new target group would provide a $2,400 tax credit.
(more…)
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