Hiring is one of the most important—and costly—decisions a business makes. But did you know your company could receive thousands of dollars in tax credits just for hiring eligible employees?

The Work Opportunity Tax Credit (WOTC) is a federal tax incentive program designed to encourage employers to hire individuals who face barriers to employment. It helps businesses reduce hiring costs while also opening doors for job seekers who need it most.

In this article, we’ll break down what WOTC is, who qualifies, how much employers can save, and how you can simplify the process to start taking advantage of it today.

What Is the Work Opportunity Tax Credit?

The Work Opportunity Tax Credit (WOTC) is a federal income tax credit available to employers that hire individuals from specific target groups who have consistently faced significant barriers to employment.

WOTC was created to promote workplace diversity and reduce the cost of hiring by rewarding companies that offer job opportunities to those who might otherwise be overlooked.

Which Employees Qualify?

To be eligible for the WOTC program, the new hire must belong to one of several targeted groups defined by the IRS. These groups include:

• Veterans
• Recipients of SNAP (food stamps)
• Long-term unemployed individuals
• Ex-felons
• Temporary Assistance for Needy Families (TANF) recipients
• Designated Community Residents living in Empowerment Zones
• Vocational Rehabilitation referrals
• SSI (Supplemental Security Income) recipients
• Youth ages 16–17 working during summer in Empowerment Zones

A full list of qualifying categories is available on the IRS website.

How Much Can Employers Save?

The WOTC program offers tax credits ranging from $1,200 to $9,600 per eligible hire, depending on the employee’s target group, hours worked, and wages earned in the first year.

Here’s a quick overview:

• Most commonly: $2,400 per eligible employee
• Veterans with service-connected disabilities: Up to $9,600
• Long-term welfare recipients: Up to $9,000 over two years

There is no limit to the number of individuals an employer can hire to qualify for the credit, which means the savings can scale significantly for businesses with high-volume hiring needs.

Benefits of WOTC for Employers

Employers who participate in WOTC enjoy multiple benefits:

• Reduced hiring costs – Every dollar received as a tax credit directly offsets federal income tax liability.
• Improved diversity and inclusion – The program encourages employers to expand their talent pool and invest in underserved communities.
• Increased retention potential – Many employers find that WOTC-eligible hires are highly motivated to perform and stay with the company.
• Support for corporate social responsibility goals – Hiring from WOTC groups aligns with social impact and workforce development initiatives.

Benefits for Job Seekers

While WOTC is technically a benefit to employers, it also provides value to applicants:

• Improved job prospects – Employers may be more open to interviewing or hiring individuals from WOTC groups.
• Reduced barriers to entry – The program helps job seekers re-enter the workforce, especially those who’ve experienced long-term unemployment, incarceration, or economic hardship.
• Supportive workplace culture – Businesses participating in WOTC often embrace inclusive hiring practices that value second chances and diverse backgrounds.

The WOTC Application Process: What to Know

Participating in the WOTC program can be extremely valuable—but the process can also be time-sensitive and administratively demanding, especially when done manually. Employers must:

1. Pre-screen applicants using IRS Form 8850 on or before the date a job offer is made.
2. Submit the form to your State Workforce Agency within 28 calendar days of the employee’s start date.
3. Track the employee’s hours and wages over time.
4. File additional forms when claiming the credit on your annual tax return.

While this may seem manageable for a small team or one-off hire, businesses with frequent or seasonal hiring cycles often find that the process can quickly become overwhelming. Missing deadlines or incomplete paperwork can result in lost credits and compliance issues.

This is where we can help.

We help streamline the WOTC process—making it easy, automated, and stress-free. Whether you’re new to WOTC or looking to improve how you manage it, we can guide you through setup and connect you with trusted professionals who handle the documentation and compliance for you.

Final Thoughts

The Work Opportunity Tax Credit is one of the most overlooked financial incentives available to employers. It reduces hiring costs, supports DEI goals, and opens the door to hiring individuals who are often passed over. But it does require the right process and timing to work effectively.

Rather than navigating the complex rules and forms on your own, let us help simplify the path forward.

Ready to Unlock Your WOTC Savings?

We work with experienced WOTC processors who can handle the heavy lifting so you don’t have to. Contact us today to learn more about how we can help you access thousands in tax credits with less paperwork and more confidence.