WORK OPPORTUNITY TAX CREDIT RESOURCE CENTER
Work Opportunity Tax Credit FAQ
CLAIMING AND FILING THE WORK OPPORTUNITY TAX CREDIT FAQs
An employer must first obtain certification from the state workforce agency confirming that the new employee belongs to an eligible WOTC targeted group.The employer and applicant complete Form 8850 as part of the pre-screening process. Form 8850 is generally submitted to the state workforce agency within 28 calendar days after the employee begins working.Once certification is received and the applicable employment requirements are satisfied, a taxable employer generally calculates the credit using Form 5884 and reports the general business credit using Form 3800.
Official sources:
IRS Work Opportunity Tax Credit:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
IRS Form 5884:
https://www.irs.gov/forms-pubs/about-form-5884
IRS Form 3800:
https://www.irs.gov/forms-pubs/about-form-3800
The employer begins by screening a job applicant for possible membership in a WOTC targeted group. Form 8850 must be completed as part of the pre-screening process on or before the day the employer makes the job offer.The employer then submits the required certification documents to the state workforce agency. If the agency confirms that the employee qualifies, it issues a certification. The employer must also satisfy the applicable employee-hours and qualified-wage requirements before calculating and claiming the credit.
Official sources:
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
Department of Labor filing information:
https://www.dol.gov/agencies/eta/wotc/how-to-file
The amount depends on the employee’s certified targeted group, qualified wages and hours worked.
For many targeted groups, the credit is generally:
• 25% of qualified first-year wages when the employee works at least 120 hours but fewer than 400 hours.
• 40% of qualified first-year wages when the employee works at least 400 hours.
For many qualifying employees, up to $6,000 in wages may be used, producing a general maximum credit of $2,400. Higher wage limits apply to certain qualified veterans. Up to $24,000 in wages may be considered for certain qualified veterans, producing a potential maximum credit of $9,600.
Official sources:
IRS Work Opportunity Tax Credit:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
IRS Form 5884 instructions:
https://www.irs.gov/instructions/i5884
The basic calculation uses the employee’s qualified wages, the wage limitation for the employee’s certified targeted group and the applicable percentage based on hours worked.
General calculation:
Fewer than 120 hours:
No WOTC is generally available.
At least 120 hours but fewer than 400 hours:
Qualified wages multiplied by 25%.
At least 400 hours:
Qualified wages multiplied by 40%.
Example:
If an employee in a targeted group with a $6,000 wage limitation earns at least $6,000 in qualified wages and works 400 or more hours, the calculation is:
$6,000 × 40% = $2,400
Different wage limits apply to certain veterans, qualified summer youth employees and long-term family assistance recipients.
Official source:
https://www.irs.gov/instructions/i5884
he Work Opportunity Tax Credit was established through the Small Business Job Protection Act of 1996. The law was enacted on August 20, 1996, and the WOTC provisions applied to qualifying individuals who began work after September 30, 1996.
That means the Work Opportunity Tax Credit reached approximately 30 years of history in 2026, although Congress has allowed the program to expire and has extended or modified it at different times.
Official source:
https://www.govinfo.gov/content/pkg/PLAW-104publ188/html/PLAW-104publ188.htm
WOTC filing involves two separate stages:
1. Employee certification
The employer submits Form 8850 and the applicable Department of Labor certification documentation to the state workforce agency. Form 8850 is generally due within 28 calendar days after the employee begins work.
2. Federal tax-credit claim
After receiving certification, a taxable employer generally calculates the credit using Form 5884 and reports it as part of the general business credit on Form 3800.
Certain qualified tax-exempt organizations hiring qualified veterans use Form 5884-C.
Official sources:
Department of Labor filing information:
https://www.dol.gov/agencies/eta/wotc/how-to-file
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
IRS Form 5884:
https://www.irs.gov/forms-pubs/about-form-5884
IRS Form 3800:
https://www.irs.gov/forms-pubs/about-form-3800
A taxable employer generally calculates the Work Opportunity Tax Credit on Form 5884. The credit then becomes part of the employer’s general business credit reported on Form 3800 and the applicable federal income-tax return.
Certain qualified tax-exempt organizations hiring qualified veterans report the credit against payroll taxes using Form 5884-C.
Official sources:
IRS Form 5884:
https://www.irs.gov/forms-pubs/about-form-5884
IRS Form 3800:
https://www.irs.gov/forms-pubs/about-form-3800
IRS Form 5884-C:
https://www.irs.gov/forms-pubs/about-form-5884-c
WORK OPPORTUNITY TAX CREDIT FORMS AND SCREENING FAQs
There is more than one form involved in the WOTC process.
Form 8850 is the Pre-Screening Notice and Certification Request for the Work Opportunity Credit. It is used to begin the employee certification process with the state workforce agency.
ETA Form 9061, or another applicable Department of Labor document, provides information the state workforce agency uses to evaluate targeted-group eligibility.
Form 5884 is generally used by taxable employers to calculate the credit.
Form 3800 is generally used to report the credit as part of the general business credit.
Official sources:
IRS Form 8850:
https://www.irs.gov/forms-pubs/about-form-8850
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
Department of Labor ETA Form 9061:
https://www.dol.gov/sites/dolgov/files/ETA/wotc/pdfs/ETA-FORM-9061-%28ENGLISH%29.pdf
IRS Form 5884:
https://www.irs.gov/forms-pubs/about-form-5884
IRS Form 3800:
https://www.irs.gov/forms-pubs/about-form-3800
The Work Opportunity Tax Credit, commonly called WOTC, is a federal general business tax credit for employers that hire and employ individuals certified as members of designated groups that have faced significant barriers to employment.
The program is provided under Section 51 of the Internal Revenue Code and is jointly administered by the Internal Revenue Service and the U.S. Department of Labor.
Official sources:
IRS Work Opportunity Tax Credit:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Department of Labor WOTC:
https://www.dol.gov/agencies/eta/wotc
he Work Opportunity Tax Credit program connects federal tax incentives with the hiring of people from designated targeted groups.
State workforce agencies review certification requests and determine whether a new employee meets the requirements of a WOTC targeted group. The IRS administers the federal tax-credit requirements, while the Department of Labor oversees the state certification system.
Official sources:
IRS Work Opportunity Tax Credit:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Department of Labor WOTC:
https://www.dol.gov/agencies/eta/wotc
Work Opportunity Tax Credit questionnaire” is commonly used to describe the pre-screening questions presented to a job applicant to determine whether the applicant may belong to a WOTC targeted group.
The official IRS pre-screening document is Form 8850. Additional information may be collected through ETA Form 9061 or another applicable certification document.
Answering a questionnaire does not automatically make an employee eligible. The state workforce agency must review the submission and issue a certification.
WOTC is the standard abbreviation for the Work Opportunity Tax Credit. It is a federal tax credit available to qualifying employers that hire individuals certified as members of designated targeted groups.
Official sources:
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
Department of Labor ETA Form 9061:
https://www.dol.gov/sites/dolgov/files/ETA/wotc/pdfs/ETA-FORM-9061-%28ENGLISH%29.pdf
Work Opportunity Tax Credit” refers to the federal general business tax credit provided under Section 51 of the Internal Revenue Code.
The credit is connected to qualified wages paid to eligible employees who are certified as members of specified targeted groups and who meet the applicable employment requirements.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Official Work Opportunity Tax Credit information explains:
• The eligible targeted groups
• The employee pre-screening process
• Form 8850 requirements
• State workforce agency certification
• Qualified wages and employee-hours requirements
• Form 5884 calculations
• Form 3800 reporting
• The current authorization status of the program
The IRS and Department of Labor are the primary federal government sources for WOTC information.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Work Opportunity Tax Credit screening is the pre-screening process used to determine whether a job applicant may be a member of a WOTC targeted group.
Form 8850 must be completed as part of the pre-screening process on or before the day the job offer is made. The completed certification request is generally submitted to the state workforce agency within 28 calendar days after the employee begins working.
The state workforce agency—not the employer—makes the certification determination.
Official sources:
IRS Work Opportunity Tax Credit:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Department of Labor WOTC:
https://www.dol.gov/agencies/eta/wotc
Work Opportunity Tax Credit survey” is an informal description commonly used for the WOTC pre-screening questions presented during hiring.
The official IRS document is Form 8850. The survey or questionnaire collects information that may indicate whether the applicant could belong to a WOTC targeted group. The state workforce agency reviews the official certification request and determines eligibility.
Official source:
https://www.irs.gov/instructions/i8850
A Work Opportunity Tax Credit assessment generally refers to reviewing an applicant’s pre-screening responses, certification documents and potential targeted-group eligibility.
The assessment itself does not award the credit. The state workforce agency must certify the employee, and the employee must satisfy the applicable hours-worked and qualified-wage requirements.
Official sources:
IRS Form 8850:
https://www.irs.gov/forms-pubs/about-form-8850
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
Form 8850 is officially titled “Pre-Screening Notice and Certification Request for the Work Opportunity Credit.
Employers use the form to pre-screen a job applicant and request certification from the state workforce agency that the employee belongs to a WOTC targeted group.
The applicant provides information on or before the day the job offer is made. The form is generally submitted to the state workforce agency no later than the 28th calendar day after the employee begins working.
Form 8850 is not submitted to the IRS.
Official sources:
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
Department of Labor filing information:
https://www.dol.gov/agencies/eta/wotc/how-to-file
The Work Opportunity Tax Credit can reduce an eligible employer’s federal tax liability when the employer hires and pays qualified wages to an employee certified as a member of an eligible targeted group.
The program also supports employment opportunities for people who have faced significant barriers to employment.
Official sources:
IRS Form 8850:
https://www.irs.gov/forms-pubs/about-form-8850
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
The Work Opportunity Tax Credit provides an eligible employer with a federal tax credit based on qualified wages paid to a certified employee.
The amount depends on the employee’s targeted group, qualified wages and hours worked. The credit belongs to the qualifying employer rather than the employee.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
The Work Opportunity Tax Credit pre-screening notice is the first page of Form 8850.
It informs the job applicant that the information is being requested so the employer can determine whether the applicant may qualify the employer for the Work Opportunity Tax Credit. It also begins the formal request for certification from the applicable state workforce agency.
Official sources:
IRS Form 8850:
https://www.irs.gov/forms-pubs/about-form-8850
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
WORK OPPORTUNITY TAX CREDIT HISTORY AND EXPIRATION FAQs
Congress established the Work Opportunity Tax Credit through Section 1201 of the Small Business Job Protection Act of 1996.
The law was enacted on August 20, 1996, and the WOTC provisions applied to individuals who began work for an employer after September 30, 1996.
Official source:
https://www.govinfo.gov/content/pkg/PLAW-104publ188/html/PLAW-104publ188.htm
The Work Opportunity Tax Credit, commonly called WOTC, is a federal general business tax credit for employers that hire and employ individuals certified as members of designated groups that have faced significant barriers to employment.
The program is provided under Section 51 of the Internal Revenue Code and is jointly administered by the Internal Revenue Service and the U.S. Department of Labor.
Official sources:
IRS Work Opportunity Tax Credit:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Department of Labor WOTC:
https://www.dol.gov/agencies/eta/wotc
Department of Labor FY 2027 budget document:
https://www.dol.gov/sites/dolgov/files/ETA/budget/pdfs/FY2027BIB_ETA.pdf
REPORTING THE WORK OPPORTUNITY TAX CREDIT FAQs
A taxable employer generally calculates the Work Opportunity Tax Credit on Form 5884 and reports it as part of the general business credit on Form 3800 and the applicable federal income-tax return.
Form 8850 is submitted to the state workforce agency for certification. It is not filed with the IRS.
Certain qualified tax-exempt organizations hiring qualified veterans use Form 5884-C to claim the credit against applicable payroll taxes.
Official sources:
IRS Form 8850 instructions:
https://www.irs.gov/instructions/i8850
IRS Form 5884:
https://www.irs.gov/forms-pubs/about-form-5884
IRS Form 3800:
https://www.irs.gov/forms-pubs/about-form-3800
IRS Form 5884-C:
https://www.irs.gov/forms-pubs/about-form-5884-c
WORK OPPORTUNITY TAX CREDIT ELIGIBILITY FAQs
The employer claims the tax credit, but the new employee must be certified by the state workforce agency as a member of an eligible targeted group.
The 10 WOTC targeted groups under the most recent authorization were:
1. Qualified IV-A recipients, generally associated with Temporary Assistance for Needy Families
2. Qualified veterans
3. Qualified ex-felons
4. Designated community residents
5. Vocational rehabilitation referrals
6. Qualified summer youth employees
7. Qualified Supplemental Nutrition Assistance Program recipients
8. Qualified Supplemental Security Income recipients
9. Long-term family assistance recipients
10. Qualified long-term unemployment recipients
Each targeted group has specific eligibility requirements. A person does not qualify merely because the person identifies generally with one of these descriptions. Certification from the state workforce agency is required.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Under the most recent authorization, WOTC applied to taxable employers of all sizes that hired and paid qualified wages to certified employees.
Certain tax-exempt employers could claim WOTC only for wages paid to qualified veterans and could claim it only against applicable payroll taxes.
The credit did not apply automatically to every new employee. The employee had to belong to a qualifying targeted group, receive state workforce agency certification and satisfy the applicable employment requirements.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Congress established the Work Opportunity Tax Credit through the Small Business Job Protection Act of 1996.
Section 1201 of Public Law 104-188 created the Work Opportunity Tax Credit provisions, which applied to qualifying individuals who began work after September 30, 1996.
Official source:
https://www.govinfo.gov/content/pkg/PLAW-104publ188/html/PLAW-104publ188.htm
WOTC benefits qualifying employers by providing a potential federal tax credit connected to qualified wages paid to certified employees.
It also benefits workers from designated groups by encouraging employers to consider and hire individuals who have faced significant barriers to employment.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
The eligible employer receives and claims the Work Opportunity Tax Credit.
The employee does not claim WOTC on the employee’s personal income-tax return. The employee’s certified eligibility and qualified wages determine whether the employer may claim the credit.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
PURPOSE AND FUTURE OF THE WORK OPPORTUNITY TAX CREDIT FAQs
The Work Opportunity Tax Credit encourages employers to hire individuals from targeted groups that have faced significant barriers to employment.
It combines an employment incentive for businesses with expanded access to employment opportunities for qualifying workers.
Official source:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
Current government information reviewed October 21, 2026]
An extension cannot be guaranteed unless Congress passes legislation and it becomes law.
H.R. 7998, called the Building Reentry and Inclusive Development for Greater Employment Act or BRIDGE Act, was introduced in the House of Representatives on March 19, 2026. The introduced bill proposes extending WOTC through December 31, 2030 and making other program changes.
The available government bill text identifies H.R. 7998 as an introduced bill referred to the House Committee on Ways and Means. It should not be described as enacted law unless an official government source confirms enactment.
Official proposed legislation:
https://www.govinfo.gov/link/bills/119/hr/7998?link-type=pdf
Official current-program sources:
https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
https://www.dol.gov/agencies/eta/wotc