The Improve and Enhance the Work Opportunity Tax Credit Act is a bipartisan legislative proposal aimed at strengthening the existing Work Opportunity Tax Credit (WOTC) to better support employers and individuals facing employment barriers. Introduced by Representative Lloyd Smucker (R-PA) on February 11, 2025, the bill seeks to modernize and expand the WOTC, which has remained largely unchanged since its inception 27 years ago.
Key Provisions of the Proposed Act:
- Increased Credit Percentage: The bill proposes raising the credit from the current 40% to 50% of qualified wages, providing greater incentives for employers to hire individuals from targeted groups.
- Additional Credit Tier: An extra credit level is introduced for employees who work 400 or more hours in their first year, encouraging employers to support longer-term employment.
- Elimination of Age Cap: The act removes the existing age limit of 40 years for Supplemental Nutrition Assistance Program (SNAP) recipients, broadening eligibility and encouraging the hiring of older workers.
Bipartisan Support:
The bill has garnered support from both sides of the aisle, with co-sponsors including:
- Representative Steven Horsford (D-NV)
- Representative Brian Fitzpatrick (R-PA)
- Representative Mike Kelly (R-PA)
- Representative Vern Buchanan (R-FL)
- Representative Tom Suozzi (D-NY)
In the Senate, companion legislation has been introduced by Senators Bill Cassidy, M.D. (R-LA) and Maggie Hassan (D-NH), reflecting the proposal’s bipartisan appeal.
Importance for Employers:
Employers should pay close attention to this legislation due to its potential to:
- Enhance Financial Incentives: The increased credit percentage and additional tier for longer employment periods can lead to substantial tax savings.
- Expand Hiring Opportunities: By eliminating the age cap for SNAP recipients, employers have access to a broader and more diverse talent pool.
- Support Workforce Development: The act encourages the hiring of individuals who have faced significant barriers to employment, promoting inclusivity and social responsibility within the workforce.
Role of Associations and Trade Groups:
Organizations such as the National Employment Opportunity Network (NEON) and the National Restaurant Association have been instrumental in advocating for the enhancement of the WOTC. NEON has emphasized the need to update the credit to reflect current economic conditions and to better support employers in hiring disadvantaged individuals. Similarly, the National Restaurant Association has highlighted the importance of the WOTC in helping restaurants and other employers hire individuals from designated groups who have consistently faced barriers to employment.
By staying informed about this proposed legislation, employers can prepare to take advantage of the enhanced benefits it offers, thereby supporting both their business objectives and the broader goal of reducing unemployment among disadvantaged groups.
Link to proposed “Enhance and Improve the Work Opportunity Tax Credit Act”: https://smucker.house.gov/sites/evo-subsites/smucker.house.gov/files/evo-media-document/Smucker%20WOTC%20Text.pdf