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A bill to amend the Internal Revenue Code of 1986 to improve and enhance the work opportunity tax credit, to encourage longer-service employment, and to modernize the credit to make it more effective as a hiring incentive for targeted workers, and for other purposes.
2/11/2025, 11:56 AM
Summary of Bill S 492
The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers who hire individuals from certain target groups, such as veterans, ex-felons, and individuals receiving government assistance. The credit is designed to incentivize employers to hire individuals who may face barriers to employment.
The proposed amendments in Bill 119 s 492 include changes to the WOTC program to make it more effective and efficient. The bill aims to streamline the application process for employers, making it easier for them to claim the credit. Additionally, the bill seeks to extend the credit to encourage longer-term employment, providing additional incentives for employers to retain employees from target groups. Overall, the Work Opportunity Tax Credit Improvement Act aims to modernize and enhance the WOTC program in order to better support targeted workers and encourage employers to hire and retain individuals who may face barriers to employment.
Congressional Summary of S 492
Improve and Enhance the Work Opportunity Tax Credit Act
This bill increases the work opportunity tax credit (WOTC) for wages paid during the first year of employment to certain employees. The bill also eliminates the maximum age limit applicable to Supplemental Nutrition Assistance Program (SNAP) benefit recipients for purposes of the WOTC.
Under current law, an employer generally may claim a WOTC in the amount of 40% of up to $6,000 (or of up to $24,000 for certain veterans, $3,000 for summer youth employees, and $10,000 for long-term family aid recipients) of qualified wages paid during the first year of employment to an employee who is a member of a targeted group. (Exceptions and limitations apply.)
The bill increases the WOTC to (1) 50% of up to $6,000 (or of up to $24,000 for certain veterans) of qualified first-year wages paid to an employee who is a member of a targeted group (other than a summer youth employee or recipient of long-term family aid), and (2) 50% of up to $12,000 (or of up to $48,000 for certain veterans) of qualified wages paid during the first year of employment to such employee if the employee works at least 400 hours during the year.
Finally, the bill eliminates the maximum age limit applicable to SNAP benefit recipients and, thus, allows an employer to claim the WOTC for qualified first-year wages paid to an employee who is at least 18 years old and receiving SNAP benefits for a certain period of time.
