Senators introduce bill to make Work Opportunity Tax Credit permanent

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A bipartisan group of senators has introduced legislation to make permanent the Work Opportunity Tax Credit, a tax break that encourages companies to hire veterans, people with disabilities and other groups who face barriers to employment, before it expires at the end of the year.

The Work Opportunity Tax Credit & Jobs Act is sponsored by Sen. Rob Portman, R-Ohio; Ben Cardin, D-Md.; Roy Blunt, R-Mo.; Sherrod Brown, D-Ohio; Bill Cassidy, R-La.; and Bob Menendez, D-N.J.

The WOTC offers an employer tax credit of between $1,200 and $9,600 per employee for hiring and retaining employees who are members of populations that traditionally have a hard time finding work, or are often out of the labor force altogether. The credit amount is based on the wages paid to employees within the targeted groups. They include veterans, long-term unemployed, ex-felons, the disabled, summer youth, and Temporary Assistance for Needy Families, Supplemental Nutrition Assistance Program, and Supplemental Security Income recipients.

“Our economy is creating jobs and increasing wages, and that’s good news, but we have much more work ahead to help those individuals who are in the shadows and struggling to find meaningful employment,” Portman said in a statement Tuesday. “Encouraging employers to hire those who have the most trouble finding work is good policy, and that’s why we should make the Work Opportunity Tax Credit permanent.”

Cardin argued that the Work Opportunity Tax Credit is one of the best tools to promote the employment of those who find it hardest to get a job. “But to be effective employers need the certainty a permanent extension provides and tens of thousands of families in Maryland need to know we have their back from now on,” he added. “That’s why we need to invest in this effective program permanently, to ensure those who need the most help are getting it.”

The WOTC is among the tax breaks that periodically expire and need to be extended by Congress. It was last extended in 2015 by the PATH Act, which retroactively allows eligible employers to claim the tax break for all targeted group employee categories that were in effect prior to the enactment of the PATH Act, if the individual began or begins work for the employer after Dec. 31, 2014, and before Jan. 1, 2020. For tax-exempt employers, the PATH Act retroactively allows them to claim the WOTC for qualified veterans who begin work for the employer after Dec. 31, 2014, and before Jan. 1, 2020. The PATH Act also added a new targeted group category to include qualified long-term unemployment recipients. The legislation, if approved would make the WOTC a permanent part of the tax code.

“Having a job is about more than just bringing home a paycheck — it’s about having pride in your work and confidence in your future,” said Blunt. “Making the Work Opportunity Tax Credit permanent will help get more Americans who have difficulty finding employment off the sidelines and into the workforce.”

“Hard work doesn’t pay off like it used to, with too many workers trying, but struggling, to get ahead,” Brown stated. “People can and want to contribute to their communities, and they deserve a fair shot. The WOTC provides that opportunity, and awards companies for investing in their greatest asset — the American worker.”

On Friday, the U.S. Bureau of Labor Statistics reported that employers added 196,000 jobs in March, and the unemployment rate remained unchanged at 3.8 percent. The BLS also revised upward the employment figures for January and February by a total of 14,000 jobs. However, the number of long-term unemployed people (those who were without jobs for 27 weeks or more) was essentially unchanged at 1.3 million in March and accounted for 21.1 percent of the unemployed.

“We have record low unemployment thanks to our pro-jobs policies,” said Cassidy. “Making the Work Opportunity Tax Credit permanent is good for American businesses and those still struggling to find work.”

“We have both a moral obligation and an economic interest in helping those who’ve been out of the workforce find a steady job so that they can support their families and contribute to our society,” said Menendez. “Making the Work Opportunity Tax Credit permanent will be a powerful incentive for employers to hire and retain veterans, the long-term unemployed, and other qualifying individuals who deserve a fair shot in our economy.”

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WOTC Tax credits Employment tax credits Finance, investment and tax-related legislation Tax breaks