Improve and Enhance the Work Opportunity Tax Credit Act
Improve and Enhance the Work Opportunity Tax Credit Act
Plain Language Summary
# Improve and Enhance the Work Opportunity Tax Credit Act – Summary **What the Bill Does:** This bill would increase financial incentives for employers to hire people from groups that traditionally face employment barriers. Specifically, it would boost the Work Opportunity Tax Credit (WOTC)—a tax break that rewards companies for hiring workers from targeted groups—from 40% to 50% of wages paid during an employee's first year. For example, under current law, an employer could claim a credit of up to $2,400 (40% of $6,000); this bill would increase that to $3,000 (50% of $6,000). The bill also removes an age limit that currently prevents older SNAP (food assistance) recipients from qualifying for the credit. **Who It Affects:** The bill primarily affects employers hiring from specific groups, including people receiving SNAP benefits, veterans, summer youth workers, long-term welfare recipients, and other disadvantaged populations.
The goal is to make it more attractive for businesses to hire these individuals by giving companies larger tax breaks. Indirectly, it could benefit job-seekers from these groups by increasing employer interest in hiring them. **Current Status:** The bill is currently in committee, meaning it has not yet been debated or voted on by the full Senate. It was sponsored by Senator Bill Cassidy (R-LA).
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
Read twice and referred to the Committee on Finance.