State Senator Introduces Legislation to Establish a California Work Opportunity Tax Credit

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March 15, 2021 – California State Senator Monique Limon (D-Santa Barbara) introduced Senate Bill 553 to create a California Work Opportunity Tax Credit that would coordinate and supplement the federal WOTC. The bill follows similar attempts such as Assembly Bill 916 from the 2017-18 session, and AB 1726 from the 2019-20 session.

SB 553 would establish an income tax credit for each taxable year beginning January 1, 2021 and ending before January 1, 2025 based on the federal WOTC. The state credit would cap the credit at $2,400 per qualified employee (the federal WOTC can be as much as $9,600 for certain individuals); would require retaining the qualified employee at least 500 hours before any credit is accrued (the federal WOTC requires a minimum of 120 hours); and would not allow any credit against the first $5,000 of wages paid (the federal WOTC is available on all first-year wages).

These changes are apparently intended to extend the benefit provided by the federal program and encourage the further retention of the qualified individuals the program seeks to help.

The bill includes a requirement that the taxpayer receive a certification from the Employment Development Department (EDD) certifying the qualification of the employee consistent with the certification process for the federal program.

Learn more about the Work Opportunity Tax Credit (WOTC).

 

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