The 400-Hour Milestone: WOTC’s Most Profitable (and Most Overlooked) Opportunity
When it comes to the Work Opportunity Tax Credit (WOTC), most employers are focused on the 120-hour milestone — and for good reason. Hitting that first threshold opens the door to a federal tax credits for eligible employees.
But stopping there? That’s like leaving at halftime.
The real value comes at 400 hours.
Why 400 Hours Matters
WOTC is designed to reward employers not just for hiring individuals from targeted groups — but for retaining them.
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At 120 hours, employers become eligible for a credit equal to 25% of qualified wages.
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At 400 hours, the credit jumps to 40%.
That’s a massive increase in value. In fact, reaching the 400-hour mark can increase your total credit by 60% or more compared to stopping at 120 hours.
And yet… too many employers never get there.
What’s Getting in the Way?
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Turnover before 400 hours: Often due to poor onboarding, lack of engagement, or misaligned expectations.
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Disconnected payroll systems: If hours aren’t being tracked or communicated effectively to your WOTC provider, opportunities go unnoticed.
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Lack of visibility: Employers may not realize that pushing just a bit further unlocks significantly more credit.
What Can You Do?
To maximize your WOTC potential at 400 hours:
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Invest in retention during the first 60–90 days. Think onboarding, mentorship, and consistent feedback.
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Monitor employee hours closely. Ensure your systems (or your provider’s systems) are tracking the 400-hour milestone.
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Partner with a WOTC optimization provider that doesn’t just help you screen — but helps you retain.
The Bottom Line
WOTC is not a “set-it-and-forget-it” benefit. It rewards sustained employment — and the employers who build processes that help employees cross the 400-hour line are the ones who truly win.
If you’re capturing WOTC credits today but still struggling with turnover, you may be leaving your biggest ROI on the table.
Don’t stop at 120. Run through 400.