PSG | Tax Credit Services | Federal Hiring Credits | WOTC

Federal Hiring Credits

The Work Opportunity Tax Credit (WOTC) provides a federal income tax credit to businesses who hire individuals from a targeted group. Targeted Groups include:

  • Members of a family receiving Temporary Assistance for Needy Families (TANF)
  • Qualified veterans receiving food stamps or having a service-connected disability
  • Ex-felons hired no later than one year after conviction or release from prison
  • An individual between the ages of 18-39 and residing in an empowerment zone, enterprise community or renewal community
  • Vocational rehabilitation referrals
  • Qualified summer youth ages 16-17 living in an empowerment zone, enterprise community or renewal community
  • Qualified food stamp recipients between the ages of 18-39
  • Supplemental security income (SSI) recipient
  • Long-term (18+ months) family assistance recipients
  • Certain unemployed Veterans
  • Disconnected Youths ages 16-24

The credit amount is 40% of the first $6,000 in first-year wages per qualified employee ($2,400 max) for employees who work at least 400 hours during the tax year, or 25% of wages paid for qualified employees who work at least 120 hours but less than 400 hours during a one-year period. The Long-Term Family Assistance category provides for up to $9,000 in credits for hiring long-term assistance recipients.

Federal Renewal Communities

HUD has designated portions of 40 communities in the U.S. as Renewal Communities (RCs). RCs provide a federal income tax credit for businesses who hire individuals who both live and work in a RC. The credit amount is up to $1,500 per employee each year, calculated on 15% of the employee's first $10,000 in wages. Unlike the WOTC, no certification process is required.

Federal Empowerment Zones

The federal government has designated 30 urban and 10 rural Empowerment Zones throughout the country. Similar to Renewal Communities, Empowerment Zones provide employers with a hiring credit for qualified employees who live and work in the Empowerment Zone. The credit is up to $3,000 per employee each year, calculated on 20% of the employee's first $15,000 in wages.

Contact PSG principals David Tierney or Joseph Abdallah to discuss how your business can benefit from federal hiring credit programs.