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Work Opportunity Tax Credit


What is WOTC?

The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have consistently faced significant barriers to employment.

WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers.

What does WOTC do?

WOTC helps targeted workers move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are able to reduce their income tax liability.

How large is the tax credit?

The maximum tax credit ranges from $1,200 to $9,600, depending on the employee hired.

WOTC Program Update

Empowerment Zones (EZ) Locator Application

As of September 2016, The EZ Locator application has been decommissioned and is no longer available from HUD's enterprise geographic information system. To help verify if a valid U.S. property address is eligible for the tax incentives or other benefits offered to EZ areas, you can use the EZ Locator Address Lookup, which is now available here: https://www.doleta.gov/business/incentives/opptax/wotcResources.cfm

More information on Empowerment Zones can be found at: https://www.hudexchange.info/programs/community-renewal-initiative/


WOTC Program Reauthorization

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act) that extends and modifies the WOTC Program and the Empowerment Zones. In summary, the PATH Act:

  • Retroactively reauthorizes the WOTC program target groups for a five-year period, from December 31, 2014 to December 31, 2019.
  • Extends the Empowerment Zones for a two-year period, from December 31, 2014 to December 31, 2016.
  • Introduces a new target group, Qualified Long-term Unemployment Recipients, for new hires that begin to work for an employer on or after January 1, 2016 through December 31, 2019.

IRS Notice 2016-22 is available here: https://www.irs.gov/pub/irs-drop/n-16-22.pdf and IRS Notice 2016-40 is available here: https://www.irs.gov/pub/irs-drop/n-16-40.pdf. For further information, view TEGL 25-15 Work Opportunity Tax Credit 2015 Reauthorization.