Employer Tax Credit

The Work Opportunity Tax Credit (WOTC) provides a federal income tax credit to businesses for hiring from one of the following target groups:

  • Short-term welfare recipients
  • 18-39 year-old food stamp recipients
  • Veterans receiving Food Stamps or a Disabled Veteran
  • Vocational rehabilitation referrals
  • 18-39 year-old Empowerment Zone or Rural Renewal County (EZ/RRC) residents
  • 16-17 year-old EZ recipient hired as summer employees
  • Ex-felons
  • Supplemental security income recipients
  • Long Term Family Assistance Recipient
  • Disconnected Youth
  • Unemployed Veteran

Eligible Uses
For all target groups, with the exception of the summer youth employee, disabled veteran and long term family assistance recipient, the tax credit is calculated at 40 percent of the first $6,000 of the first year's wages (for a maximum credit of $2,400) if 400 hours is reached. For employees who work at least 120 hours, but do not reach 400 hours, the credit is calculated at 25 percent of the first $6,000 of wages (for a maximum credit of $1,500).

The credit for summer youth employees is calculated at 40 percent of the first $3,000 of the first year's wages (for a maximum credit of $1,200) if 400 hours is reached. For employees who work at least 120 hours, but do not reach 400 hours, the credit is 25 percent of the first $3,000 of the first year's wages (for a maximum credit of $750).

The tax credit for the Disabled Veteran is calculated at 40 percent of the eligible employees first $12,000 in wages for the first year (up to a maximum credit of $4,800) if 400 hours of employment is reached. For employees who work at least 120 hours, but less than 400 hours, the credit is calculated at 25 percent of the employees first $12,000 in wages for the first year (up to a maximum credit of $3,000).

The credit for the long term family assistance recipient is equal to 40 percent of the first $10,000 of the first year's wages (for a maximum credit of $4,000), and 50 percent of the first $10,000 of the second year's wages (for a maximum credit of $5,000). The maximum amount of credit for the 2 years combined is $9,000.

Funding Limits
There is no limit on the number of qualifying new hires per business or total amount of tax credits distributed per year.

Application Procedure
The business will submit Form 8850, "Pre-screening Notice and Certification Request" to the Division of Workforce Development (DWD). The form must be postmarked within 28 days of the employee's start date. The business will also submit Form 9061, "Individual Characteristic," or Form 9062 "Conditional Certification," which may be submitted at the same time as the 8850 or at a later date. The forms will be reviewed to determine the eligibility of the new hire. A certification or denial for the tax credit will be issued by DWD.

The forms may be obtained by contacting DED at (800) 877-8698 or (573)522-9581. Forms may also be accessed from the Department of Labor's website at: www.doleta.gov/business/incentives/opptax/


South Central Workforcs Investment Board
South Central Workforce Investment Board is an equal opportunity employer/program. Auxiliary aids and services are available upon request to individuals with disabilities.
Contact EO Officer Valarie Haring vharing@scwib.org
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