S 3265
Improve and Enhance the Work Opportunity Tax Credit Act
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Bill overview
This bill, the Improve and Enhance the Work Opportunity Tax Credit Act, extends the existing Work Opportunity Tax Credit (WOTC) through December 31, 2030, and increases the credit amount. It enhances the credit for veterans and family assistance recipients, adjusts the credit for inflation, and introduces new provisions to encourage longer-term employment. The bill also clarifies eligibility rules and promotes hiring of targeted groups in key industries.
Key provisions
- Extends the Work Opportunity Tax Credit through December 31, 2030.
- Increases the WOTC credit for qualified first-year wages, up to a maximum of 50% of wages up to $6,000 for some individuals, and up to 50% of wages exceeding $6,000 for those with 400+ hours of service.
- Includes inflation adjustments to the credit amount, indexed to the cost-of-living.
- Expands the WOTC to include family assistance recipients, with a reduced credit rate.
- Increases the WOTC credit for certain veterans based on their qualifying status.
- Modifies the WOTC for summer youth employees.
- Removes the age limit for family assistance recipients.
- Defines a ‘qualified military spouse’ for WOTC eligibility.
Who is affected
- Employers
- Veterans
- Families receiving family assistance
- Low-income workers
- Small businesses
Notable changes
- Extends the WOTC program for an additional five years.
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119th CONGRESS — 1st Session
S. 3265
IN THE SENATE OF THE UNITED STATES
A BILL
To amend the Internal Revenue Code of 1986 to improve and enhance the work opportunity tax credit, to encourage longer-service employment, and to modernize the credit to make it more effective as a hiring incentive for targeted workers, and for other purposes.
This Act may be cited as the Improve and Enhance the Work Opportunity Tax Credit Act
.
Section 51(c)(4) of the Internal Revenue Code of 1986 is amended by striking December 31, 2025
and inserting December 31, 2030
.
Section 51(a) of the Internal Revenue Code of 1986 is amended—
by striking shall be equal to 40 percent
and all that follows and inserting the following:
shall be equal to the sum of—
Section 51 of such Code is amended by adding at the end the following new subsection:
such dollar amount, multiplied by
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting calendar year 2024
for calendar year 2016
in subparagraph (A)(ii) thereof.
Any increase determined under paragraph (1) shall be rounded to the next nearest multiple of $100.
Section 51(b)(3) of such Code is amended to read as follows:
the applicable amountfor
$6,000.
in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(iv), 250 percent of the dollar amount in effect under subsection (a)(1), and
in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(II), 400 percent of the dollar amount in effect under subsection (a)(1).
Section 51(e)(1) of such Code is amended by striking family assistance recipient—
and all that follows and inserting the following:
family assistance recipient, in lieu of subsection (a), the amount of the work opportunity credit determined under this section for the taxable year shall be equal to—
50 percent of so much of the qualified second-year wages with respect to such individual for such year as does not exceed $10,000.
The heading for section 51(e) of such Code is amended by striking Credit for second-year wages
and inserting Special rules for determining credit
.
Section 51(d)(7)(B) of such Code is amended—
by striking clause (ii),
by striking , and
at the end of clause (i) and inserting a period,
by redesignating clause (i) (as so amended) as clause (v), and
by inserting before such clause (v) (as so redesignated) the following new clauses:
in the case of an individual described in subsection (i)(3)(A), clause (i) shall be applied by substituting 25 percent
for 40 percent
,
in the case of an individual described in subsection (i)(3)(B), no wages shall be taken into account under clause (i),
the amount of qualified first-year wages which may be taken into account with respect to such individual shall not exceed 50 percent of the dollar amount in effect under subsection (a)(1), and
$6,000and inserting
the dollar amount in effect under subsection (a)(1), and
in subparagraph (B), by striking $500 per month
and inserting one-twelfth of the dollar amount in effect under subsection (a)(1) per month
.
Section 51(e)(3) of such Code is amended by striking subparagraphs (A) and (B) and inserting the following:
the dollar amount in effect under subsection (e)(1)for
the dollar amount in effect under subsection (a)(1), and
one-twelfth of the dollar amount in effect under subsection(e)(1)for
one-twelfth of the dollar amount in effect under subsection (a)(1).
subsection (a)and inserting
subsection (a)(1).
Section 51(i)(3)(A) of such Code is amended by striking 40 percent
and inserting 50 percent
.
Section 51(d)(8)(A)(i) of such Code is amended by striking but not age 40
.
The amendments made by this section shall apply to individuals who begin work for the employer after December 31, 2025.
Paragraph (1) of section 51(d) of the Internal Revenue Code of 1986 is amended by striking or
at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting , or
, and by adding at the end the following new subparagraph:
a qualified military spouse.
Subsection (d) of section 51 of such Code is amended by adding at the end the following new paragraph:
The term qualified military spouse means any individual who is certified by the designated local agency as being (as of the hiring date) a spouse of a member of the Armed Forces of the United States.
The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act to individuals who begin work for the employer after such date.
The Secretary of the Treasury, the Secretary of Commerce, the Secretary of Labor, and the Administrator of the Small Business Administration (or their respective delegates), in consultation with each other and consistent with applicable law, shall promote the hiring of members of a targeted group (as defined in section 51(d) of the Internal Revenue Code of 1986) to business leaders across critical industry sectors, including manufacturing, infrastructure, energy, health care, and construction.