For many businesses, finding qualified employees while managing labor costs can be a challenge. Fortunately, the federal government offers a program that rewards companies for giving opportunities to individuals who face barriers to employment. This incentive, known as WOTC tax credits, helps employers reduce their tax liability while promoting inclusive hiring practices.
What Are WOTC Tax Credits?
The WOTC tax credits — or Work Opportunity Tax Credit — is a federal program designed to encourage employers to hire individuals from specific target groups that often face obstacles to employment. These groups include:
Veterans
Long-term unemployed individuals
Recipients of Temporary Assistance for Needy Families (TANF)
SNAP (food stamp) recipients
Ex-felons and certain vocational rehabilitation referrals
By hiring from these groups, employers not only expand their talent pool but also receive valuable tax benefits.
How Businesses Benefit
Participating employers can earn a tax credit ranging from $1,200 to $9,600 per eligible employee, depending on the target group and the hours worked. These savings directly reduce the amount of federal income tax owed, improving a company’s bottom line while contributing to community growth.
Other key advantages include:
Enhanced Diversity – Builds a more inclusive workforce.
Reduced Turnover Costs – Many WOTC hires become long-term, loyal employees.
Positive Public Image – Demonstrates social responsibility and community involvement.
How to Claim WOTC Tax Credits
To claim the WOTC tax credits, employers must submit Form 8850 to their state workforce agency within 28 days of hiring a qualified individual. Partnering with experienced professionals, such as those at Federal Tax Credits ORG, ensures proper documentation and compliance with IRS requirements.
Final Thoughts
The WOTC tax credits program is more than just a financial incentive—it’s an opportunity to make a difference. Businesses can strengthen their workforce, support their communities, and enjoy meaningful tax savings, all through smarter hiring practices.