The Work Opportunity Tax Credit (WOTC)
The Work Opportunity Tax Credit (WOTC) is a Federal tax credit available to employers for hiring individuals from certain target groups who have faced significant barriers to employment. WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers.
WOTC helps targeted workers move from economic dependency into self-sufficiency as they earn a steady income and become contributing taxpayers, while participating employers are able to reduce their income tax liability.
Employers claim about $1 billion in tax credits each year under the WOTC program. There is no limit on the number of individuals an employer can hire to qualify to claim the tax credit, and there are a few simple steps to follow to apply for WOTC.
Before applying for a tax credit, complete our online WOTC registration form. We’ll review your information and reach out to you with further instructions.
For assistance with the State of Nebraska WOTC application process, contact: NDOL.WOTC@nebraska.gov
Frequently Asked Questions
- A veteran who is:
- A member of a family that received SNAP benefits (food stamps) for at least a 3-month period during the 15-month period ending on the hiring date.
- Entitled to compensation for a service-connected disability:
- Hired within 1 year of discharge or release from active duty
- Unemployed at least 6 months in the year ending on the hiring date
- At least 4 weeks in the year ending on the hiring date
- At least 6 months in the year ending on the hiring date
- Have served on active duty (not including training) in the U.S. Armed Forces for more than 180 days or have been discharged or released from active duty for a service-connected disability
- Not have a period of active duty (not including training) of more than 90 days that ended during the 60-day period ending on the hiring date
- Long-term Temporary Assistance for Needy Families (TANF) Recipient:
- A member of a family that meets one of the following circumstances:
- Received TANF benefits for at least 18 consecutive months ending on the hiring date.
- Received TANF benefits for at least 18 consecutive or non-consecutive months after August 5, 1997, and has a hiring date that is not more than 2 years after the end of the earliest 18-month period after August 5, 1997.
- Stopped being eligible for TANF payments during the past 2 years because a Federal or state law limited the maximum time those payments could be made.
- A member of a family that meets one of the following circumstances:
- Short-term TANF Recipient:
- A member of a family that received TANF benefits for any 9-month period during the 18-month period ending on the hiring date.
- SNAP (food stamp) Recipient:
- An 18-39 year old member of a family that received Supplemental Nutrition Assistance Program (SNAP) benefits for the 6 months ending of the hiring date or received SNAP benefits for at least 3 of the 5 months ending on the hiring date.
- Designated Community Resident:
- An 18-39 year old who lives within one of the federally designated Rural Renewal Counties or Empowerment Zones. There are no EZ zones in Nebraska. There are 36 Nebraska counties designated as RRC: Antelope, Banner, Boone, Box Butte, Boyd, Burt, Cedar, Chase, Duel, Dundy, Fillmore, Franklin, Garden, Garfield, Greeley, Hayes, Hitchcock, Holt, Jefferson, Johnson, Logan, Nance, Nemaha, Nuckolls, Pawnee, Perkins, Red Willow, Richardson, Rock, Sheridan, Sherman, Thayer, Thomas, Valley, Webster and Wheeler.
- Vocational Rehabilitation Referral:
- An individual with a disability who completed or is completing rehabilitative services from a state-certified agency, an Employment Network under the Ticket to Work program, or the U.S. Department of Veteran Affairs.
- An individual who has been convicted of a felony and has a hiring date that is not more than 1 year after the conviction or release from prison.
- Supplemental Security Income (SSI) recipient:
- A recipient of SSI benefits for any month ending during the past 60-day period ending on the hire date.
Veteran Target Group:
- Receives SNAP (food stamps) benefits: $2,400
- Entitled to compensation for service-connected disability
- Hired one year from leaving service: $4,800
- Unemployed at least 6 months: $9,600
- At least 4 weeks: $2,400
- At least 6 weeks: $5,600
Other WOTC Target Groups:
- Short-Term TANF Recipient: $2,400
- Long-Term TANF Recipient: $9,000 (over 2 years)
- SNAP (food stamp) recipient: $2,400
- Designated Community Resident: $2,400
- Vocational Rehabilitation Referral: $2,400
- Ex-Felon: $2,400
- SSI Recipient: $2,400
The tax credit employers can claim depends on the target group of the individual hired, the wages paid to that individual in the first year of employment, and the number of hours that individual worked. There is also a maximum tax credit that can be earned.
- If the individual works at least 120 hours, the employer may claim a tax credit equal to 25% of the individual's first year wages, up to the maximum tax credit.
- If the individual works at least 400 hours, the employer may claim a tax credit equal to 40% of the individual's first year wages, up to the maximum tax credit.
Only for the Long-term Temporary Assistance for Needy Families (TANF) target group, the credit is available to employers who hire members of this group for a two-year period.
- In the first year, employers may claim a tax credit equal to:
- 25% of the first-year wages, up to the maximum tax credit, if the individual works at least 120 hours.
- 40% of the first-year wages, up to the maximum tax credit, if the individual works at least 400 hours.
- In the second year, employers may claim a tax credit equal to:
- 25% of the second-year wages, up to the maximum tax credit, if the individual works at least 120 hours.
- 50% of the second-year wages, up to the maximum tax credit, if the individual works at least 400 hours.
After the required certification is secured, taxable employers claim the tax credit as a general business credit against their income tax. For additional information, see:
- Form 5884 (with instructions) (PDF)
- Form 3800 (PDF)
- Instructions for Form 3800 (PDF)
- Your business's related income tax return and instructions (i.e., Forms 1040, 1041, 1120, etc.)
The Work Opportunity Tax Credit (WOTC) program gives State Workforce Agencies (SWA) authority to issue Conditional Certifications.
A Conditional Certification is a preliminary determination issued by an agency authorized by SWA that an applicant is a member of a WOTC target group.
A Conditional Certification may be a useful tool for a person seeking employment. The Conditional Certification (ETA 9062) attests that the person listed on the document may be a member of a WOTC target group. The agency or applicant may present this signed form to a potential employer and, if that person is hired, the employer may be eligible for the tax credit. Authorized agencies may download the ETA 9062 form from this website.
Currently, the following agencies are authorized to issue Conditional Certifications:
- Vocational Rehabilitation Services
- Nebraska Commission for the Blind and Visually Impaired
Contact Federal WOTC program: Ask.WOTC@dol.gov