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.
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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.
Last updated May 2026. Educational only — confirm Form 8850 deadlines with your state workforce agency.