A group of five Ways and Means Committee members, Representatives Steven Horsford (D-NV), Tom Suozzi (D-NY), Don Beyer (D-VA), Brad Schneider (D-IL), and Gwen Moore (D-WI), have introduced a proposal to temporarily increase the value of the Work Opportunity Tax Credit (WOTC) as part of the pandemic economic recovery process. The proposed changes would be effective for two years from the passage after which the benefit would revert to its current level.
Currently, WOTC provides a tax credit of 40% of the first $6,000 of wages, or $2,400 in most cases. The current credit is generally limited to wages paid in the first year of employment. The new bill proposes increasing that credit to 50% of the first $10,000 in wages, and to allow an additional credit of 50% of $10,000 in the second year of employment.
The legislation would also temporarily suspend the restriction against claiming WOTC for rehires.
According to a press release:
“WOTC is a well-known federal tax credit that encourages employers to hire qualifying individuals by offsetting a portion of wage costs. However, the WOTC amount has not changed since its initial enactment 25 years ago. Due to wage inflation, the value of credit has significantly eroded over time, placing qualifying employees at a disadvantage during a critical time when high unemployment continues.”