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Tax Credit Programs for Employers and Employees

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Notice to Employers

On May 25, 2007, the President signed into law the "Small Business and Work Opportunity Tax Act of 2007”, which in part, reauthorized and extended the Work Opportunity Tax Credit (WOTC) through August 31, 2011.

The reauthorization made certain modifications to the WOTC tax credit program for employees that begin work for an employer after 05-25-2007, including, but not limited to, the following:

• Renames the High-Risk Youth Group and calls it Designated Community Residents;
• Increases the age criteria for Designated Community Residents to 18 through 39 years of age;
• Expanded Designated Community Residents to include employee’s who reside in a Rural Renewal County ;
• Establishes a new “Disabled Veteran” sub-group under the current Qualified Veteran Category.

 The program changes effective as of January 1, 2007 include:

• Deadline for receipt of required form 8850 increased to 28 days from the date the applicant starts work (no faxes or emails);
• Age requirement for Food Stamp category now is 18 through 39;
• Eliminated the income limit requirement for Ex-Felon category;
• Incorporated W+W into the WOTC credit;
• Replaced by Long-Term Family Assistance Category (LTFA):
  • Increased first year credit to 40% of first $10,000 of qualified wages
  • 2^nd year credit remains at 50% of first $10,000 of qualified wages

There are a number of tax credit programs that can help businesses reduce their Federal and State tax liability.  The employer tax credit incentives can help businesses create jobs, boost local economies and help new employees obtain and retain jobs. 

Need Help?

Applying for the WOTC tax credits is a relatively simple task.  For assistance contact your local Wisconsin Job Center.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a federal income tax credit that provides an incentive for private for profit employers to hire individuals of certain target groups, which have traditionally faced significant barriers to employment.  These credits reduce an employer’s cost of doing business and require little paperwork.  Employers can save up to $2,400 per new hire.  For the Long-Term Family Assistance recipients, the employer can save up to $9,000 per new hire, over a two year time period. 

Community and Enterprise Development Zone Tax Credits

Both the Wisconsin’s Community and Enterprise Development Zone Tax Credit programs provide tax incentives to new or expanding businesses whose projects will affect distressed areas throughout the State.  For more information contact the Department of Commerce.

Employee Tax Credits

There are several employee tax credit incentives that can increase the take-home pay of employees at no cost to the employer. 

The Earned Income, Homestead and Child Tax Credits can help low income workers increase their income substantially by reducing their income tax liability and, at times, providing a refund greater than the taxes owed.  Not only do these credits reduce their tax burden and supplement their wages, but they also make work more attractive than welfare, benefiting employers as well as employees. 

Updated February 04, 2009
Content Contact: DWD Tax Credit

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