Improve and Enhance the Work Opportunity Tax Credit Act
Improve and Enhance the Work Opportunity Tax Credit Act
Plain Language Summary
# Summary of HR 1177: Improve and Enhance the Work Opportunity Tax Credit Act **What the Bill Does** This bill would increase financial incentives for employers to hire people from specific groups that face barriers to employment. Currently, employers can claim a tax credit (a reduction in taxes owed) of 40% of wages paid to qualifying new employees, up to certain limits. The bill would increase this credit to 50% and raise the wage caps, making the incentive more generous. For example, instead of getting a credit on $6,000 of wages, employers could potentially get a credit on $12,000 of wages for certain employees. **Who It Affects** The bill primarily affects employers and job seekers from "targeted groups"—including long-term unemployed individuals, veterans, people receiving food assistance (SNAP), and others.
A key change is removing the age limit for SNAP recipients, allowing older workers receiving food assistance benefits to qualify for the credit. Employers in all industries could benefit by hiring from these groups, while individuals facing employment challenges could see expanded job opportunities. **Current Status** The bill is currently in committee, meaning it has been introduced but hasn't yet been debated or voted on by the full House of Representatives. It was introduced by Representative Lloyd Smucker (R-PA) and requires further action before it could become law.
CRS Official Summary
Improve and Enhance the Work Opportunity Tax Credit Act This bill increases the work opportunity tax credit (WOTC) for wages paid during the first year of employment to certain employees. The bill also eliminates the maximum age limit applicable to Supplemental Nutrition Assistance Program (SNAP) benefit recipients for purposes of the WOTC.Under current law, an employer generally may claim a WOTC in the amount of 40% of up to $6,000 (or of up to $24,000 for certain veterans, $3,000 for summer youth employees, and $10,000 for long-term family aid recipients) of qualified wages paid during the first year of employment to an employee who is a member of a targeted group. (Exceptions and limitations apply.)The bill increases the WOTC to (1) 50% of up to $6,000 (or of up to $24,000 for certain veterans) of qualified first-year wages paid to an employee who is a member of a targeted group (other than a summer youth employee or recipient of long-term family aid), and (2) 50% of up to $12,000 (or of up to $48,000 for certain veterans) of qualified wages paid during the first year of employment to such employee if the employee works at least 400 hours during the year.Finally, the bill eliminates the maximum age limit applicable to SNAP benefit recipients and, thus, allows an employer to claim the WOTC for qualified first-year wages paid to an employee who is at least 18 years old and receiving SNAP benefits for a certain period of time.
Latest Action
Referred to the House Committee on Ways and Means.