How much is the Work Opportunity Tax Credit worth?

For most targeted groups, the credit is 40% of the first $6,000 of first-year wages — a maximum of $2,400 per employee — if the worker completes at least 400 hours. Certain qualified veterans qualify for a higher wage base, producing a credit of up to $9,600 per employee. Workers who complete 120 to 399 hours generate a reduced 25% credit.

What is the 28-day deadline for WOTC?

You must submit Form 8850 to your state workforce agency no later than the 28th calendar day after the new employee's start date. Miss that deadline and the credit is forfeited for that hire — there is no retroactive certification. Pre-screening on or before the day of the job offer is the standard practice.

Who qualifies an employer for the WOTC?

New hires from IRS-designated targeted groups, including qualified veterans, long-term unemployment recipients, SNAP (food stamp) recipients, TANF recipients, ex-felons, designated community residents, vocational rehabilitation referrals, and Supplemental Security Income recipients. The state workforce agency certifies eligibility after you submit Form 8850 and ETA Form 9061.

How do I claim the credit once an employee is certified?

After the state workforce agency certifies the hire, you calculate the credit on Form 5884 and carry it to Form 3800, the General Business Credit, filed with your business return. The credit reduces your income tax; unused amounts follow the general business credit carryback and carryforward rules.

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Business Tax Credits

The Work Opportunity Tax Credit: Up to $9,600 Per Qualifying Hire

The WOTC rewards employers for hiring from groups that face barriers to work — but the credit is forfeited unless you pre-screen with Form 8850 by the 28th day of employment. Here's how the credit is calculated and how to never miss the deadline.

SMAART Tax Team

February 18, 2026

5 min read

|Reviewed by Lisa Terrell, Enrolled Agent