What is the Work opportunity tax credit?
The Work opportunity tax credit is a federal tax incentive that provides employers with credits for hiring individuals from specific target groups who face significant barriers to employment. The credit ranges from $1,200 to $9,600 per qualifying employee, calculated as a percentage of wages paid during the first year of employment. Eligible target groups include qualified veterans, ex-felons, long-term unemployed individuals, and recipients of government assistance programs. The credit rate varies from 25% for employees working 120-399 hours to 40% for those working 400 hours or more per week. Employers must obtain certification through designated state workforce agencies and maintain detailed documentation of this certification. The Work opportunity tax credit encourages hiring from disadvantaged populations while providing substantial tax savings for qualifying businesses.
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