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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.
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Don’t cry. We can make it better!
Many employers are unaware they are eligible for special tax relief created for the covid-19 pandemic. The covid-19 Employee Retention Credit (ERC) is worth up to $26,000 per employee when a business qualifies. That means, for example, that a small business with 10 employees could qualify for up to $260,000. It sounds like a lot (and it is), but it’s also realistic.
ERC is a fully refundable tax credit. That means if you qualify, you receive a tax refund check from the U.S. Treasury.
There’s still hope if you didn’t claim your ERC tax credit during the pandemic (between March 2020 and December 2021). For a limited time, you can claim it retroactively as a tax refund by amending your 2020 and 2021 payroll tax returns.
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