WOTC Tax Credit Amounts
How are the tax credits calculated?
Employers generally can earn a tax credit equal to 25% or 40% of a new employee's first-year wages, up to the maximum for the target group to which the employee belongs.
- For all target groups except the long-term TANF recipient, employers will earn 25%, if the employee works at least 120 hours, and 40%, if the employee works at least 400 hours.
- For the long-term TANF target group, employers will earn 40%, if the employee works at least 400 hours in the first year, and 50%, if the employee works at least 400 hours in the second year.
Use the WOTC Calculator to see how much your business can earn in tax credits.
What are the maximum tax credit amounts?
The maximum tax credit amounts depend on the wages paid to the new hire, the new employee's target group and the number of hours worked during the first year of employment.
Veteran Target Group
Maximum Tax Credit
|Receives SNAP (food stamps) benefits||$2,400 |
|Entitled to compensation for service-connected disability|
|Hired one year from leaving service||$4,800 |
|Unemployed at least 6 months||$9,600 |
|At least 4 weeks||$2,400 |
|At least 6 months||$5,600 ||
Veteran Minimum Retention Period Chart
Maximum Tax Credit
|Qualified Long-Term Unemployment Recipient||$2,400 |
|Short-Term TANF Recipient||$2,400 |
|Long-Term TANF Recipient ||$9,000 (over 2 yrs)|
|SNAP (food stamp) Recipient||$2,400 |
|Designated Community Resident||$2,400 |
|Vocational Rehabilitation Referral||$2,400 |
|SSI Recipient||$2,400 |
Minimum Retention Period Chart for All Target Groups
How can I calculate the tax credit for my business?
The amount of the tax credit that employers can claim depends on the target group of the individual hired, the wages paid to that individual, and the number of hours that individual worked during the first year of employment. There is also a maximum tax credit that can be earned for each target group.
For the long-term Temporary Assistance for Needy Families (TANF) Recipient target group, the credit is available to employers through the second year of employment after the employee works at least 400 hours. The employer may claim a tax credit equal to $9,000 total over a two-year period, as follows:
- 40% of first year wages, up to the maximum credit of $4,000, and
- 50% of second year wages, up to the maximum tax credit of $5,000.
For all other target groups, employees must work at least 120 hours in the first year of employment for the employer to qualify to claim the tax credit with the Internal Revenue Service (IRS). The tax credit is generally calculated as follows.
- After working at least 120 hours, the employer may claim a tax credit equal to 25% of the new hire's first year of qualified wages. The maximum tax credit on first year wages is between $750 and $6,000, depending on the eligible target group.
- After working at least 400 hours, the employer may claim a tax credit equal to 40% of the new hire's first year of wages. The maximum tax credit on first year wages is between $1,200 and $9,600, depending on the eligible target group.