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Work Opportunity Tax Credit

The Work Tax Credit is a federal tax credit given to companies that hire employees from one of nine target groups. The tax credit is used to reduce a company’s federal tax payment in the current tax year.

It provides a tax credit up to 35% to employers who hire tax credit eligible employees. The maximum tax credit is $2,100 which represents 35% of $6,000 in wages paid.

To benefit from the targeted jobs tax credit a company needs to have a tax ID number, pay federal income tax and directly employ its workers. In addition, the company must hire workers from one of seven targeted groups. These targeted groups include: Qualified IV-A Recipient (AFDC), Qualified Veteran, Qualified Ex-Felon, High Risk Youth, Vocational Rehabilitation Referral, Qualified Summer Youth Employee and Qualified Food Stamp Recipient. Individuals must be certified as WOTC eligible prior to hire. Certification is handled locally by Texas Employment Commission.

If a company hires ten tax credit certified employees per year it will reduce its tax burden by $21,000 assuming that the employees make at least $6,000. This amount is deducted from federal corporate income taxes to be paid.

Contact: Kelly Violette, AICP
Executive Director
Tomball Economic Development Corporation
29201 Quinn Rd., Suite B
P.O. Box 820
Tomball, TX 77375
281-401-4086
kviolette@tomballtxedc.org