WOTC Target Group Calculator 2026
The Work Opportunity Tax Credit calculator computes IRC §51 federal hiring credits by target group, hours worked, and first-year qualifying wages. Credit rate is 25% (120-399 hours) or 40% (400+ hours), with wage caps from $6,000 (SNAP/TANF/ex-felon) to $24,000 (disabled veterans). Form 8850 must be signed by the employee on or before the job-offer date and submitted to the State Workforce Agency within 28 days of the start date.
| Target group wage cap | — |
| Qualifying wages used | — |
| Hours bracket | — |
| Number of hires | — |
| Per-hire credit | — |
| Total federal WOTC | — |
The Work Opportunity Tax Credit under IRC §51 gives US employers a federal tax credit between $1,500 and $9,600 per qualifying hire from target groups that face employment barriers — veterans, SNAP/TANF recipients, ex-felons, designated community residents, vocational rehabilitation referrals, summer youth, SSI recipients, and the long-term unemployed. WOTC is authorized through Dec 31, 2025 under current law; extension to 2026 and beyond is pending in Congress.
Credit Rate by Hours Worked
WOTC pays 25% of qualifying wages for employees working 120-399 hours in the first year and 40% of qualifying wages for employees working 400+ hours. Employees under 120 hours earn no credit. The "first year" is the 12-month period beginning on the hire date. Summer Youth employees use 90-day hour thresholds. Long-Term TANF recipients earn 40% × $10,000 in year 1 PLUS 50% × $10,000 in year 2 — a total potential credit of $9,000 per LT-TANF hire.
Wage Caps by Target Group
The qualifying wage base varies dramatically: Summer Youth $3,000, most groups $6,000 (yielding max $2,400 credit at 40%), Long-Term TANF $10,000, disabled veterans $12,000, veterans unemployed 6+ months $14,000, disabled veterans unemployed 6+ months $24,000 (yielding the maximum $9,600 credit). Wages above the cap are excluded from the credit calculation but the employee remains qualifying.
Form 8850 28-Day Deadline (Critical)
IRS Form 8850 (Pre-Screening Notice) MUST be signed by the employee on or before the day a job offer is made and submitted to the State Workforce Agency (SWA) within 28 calendar days of the employee's first day of work. Late submission = automatic credit denial with no good-cause exceptions. Most companies pre-screen via online portal at offer stage. Employer also files Form 9061 or 9062 to document the target group. The credit is claimed on Form 5884 with the income tax return. Sources: DOL WOTC Program, IRC §51, IRC §52, IRS Form 8850 Instructions.
WOTC Target Groups and Maximum Credit per Hire
Every figure below assumes the employee reaches 400+ hours, which unlocks the 40% rate. At 120-399 hours the rate drops to 25% and every maximum in the last column falls by 37.5%.
| Target group | Qualifying wage cap | Max credit (400+ hrs) |
|---|---|---|
| Summer youth (90-day period) | $3,000 | $1,200 |
| SNAP recipient | $6,000 | $2,400 |
| Ex-felon | $6,000 | $2,400 |
| Designated community resident | $6,000 | $2,400 |
| Vocational rehabilitation referral | $6,000 | $2,400 |
| SSI recipient | $6,000 | $2,400 |
| Qualified long-term unemployed (27+ weeks) | $6,000 | $2,400 |
| Veteran — SNAP recipient | $6,000 | $2,400 |
| Veteran — unemployed 4 weeks to 6 months | $6,000 | $2,400 |
| Disabled veteran, hired within 1 year of discharge | $12,000 | $4,800 |
| Veteran — unemployed 6+ months | $14,000 | $5,600 |
| Disabled veteran — unemployed 6+ months | $24,000 | $9,600 |
| Long-term TANF recipient (two-year credit) | $10,000 yr 1 + $10,000 yr 2 | $9,000 ($4,000 + $5,000) |
Three practical points the wage caps hide. An employee can only be certified under one target group, so where someone qualifies twice — a disabled veteran who also receives SNAP — the certification request should name the group with the higher cap. The credit is non-refundable and offsets income tax liability, though tax-exempt employers can claim a limited version against the employer share of Social Security tax for qualified veterans only. And a rehire never qualifies: WOTC applies to first-time hires at that employer, which is the single most common cause of a certification being revoked after the fact.
WOTC Authorization Status and What to Do During a Lapse
WOTC is a statutorily time-limited credit rather than a permanent part of the code, and the current authorization runs to hires made on or before 31 December 2025 unless Congress extends it. Because eligibility attaches to the hire date, a lapse does not affect credits already earned on earlier hires — those continue to be claimed on Form 5884 as the wages are paid. What a lapse does affect is whether hires made during the gap will ever qualify. Congress has repeatedly extended WOTC retroactively after an expiry, and when it does, the Department of Labor has issued transition relief that reopens the Form 8850 filing window for hires made during the gap. The practical consequence for employers is that you should keep pre-screening and keep filing Form 8850 within 28 days during a lapse, even while the credit is technically unavailable. Employers who stop filing lose the paperwork trail and cannot benefit from a retroactive extension; those who keep filing simply claim the credit later. Confirm current authorization and any transition-relief deadline before you change your process, using the DOL Employment and Training Administration WOTC programme and the IRS Form 8850 instructions. Last updated: August 2026.
Last updated August 2026. Educational only — confirm Form 8850 deadlines with your state workforce agency.