WOTC in 2026: The Program Is in Hiatus. Here Is What to Do Anyway.
If you are an employer who has been counting on the Work Opportunity Tax Credit this year, the situation is this: the program's authorization has lapsed, but you should keep screening and filing as though it has not.
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Current federal program material is published on the U.S. Department of Labor WOTC page.
That sounds like unnecessary paperwork. It is the opposite — it is the only thing that preserves your claim if Congress restores the credit retroactively, which is what has happened after every previous lapse.
General information, not tax or legal advice. Take advice from your tax adviser.
What happened
WOTC was authorized until December 31, 2025, under Section 113 of Division EE of P.L. 116-260, the Consolidated Appropriations Act, 2021.
That authorization expired. As of January 1, 2026, the program is in a legislative hiatus because its latest authorization ended.
The credit remains available for wages paid to individuals who began work on or before December 31, 2025. The lapse affects new hires from January 1, 2026 onward.
State workforce agencies are handling it consistently: for individuals who begin work on or after January 1, 2026, certification applications reflect a pending status subject to program reauthorization.
What WOTC is, briefly
A federal tax credit for employers who hire job seekers who have consistently faced barriers to employment. Employers must apply for and receive certification verifying the new hire is a member of a targeted group before claiming the credit. Taxable employers claim it as a general business credit against income taxes; tax-exempt employers claim it against payroll taxes.
For this audience, two targeted groups matter most: individuals receiving Supplemental Security Income, and individuals referred by a Vocational Rehabilitation agency.
The credit is calculated as 40% of first-year eligible wages up to a maximum of $6,000 per employee, with a reduced rate where the employee completed at least 120 but fewer than 400 hours.
Why you should keep filing
This is the practical heart of it.
Employers can protect potential future eligibility by continuing to screen new hires and filing the required paperwork on time during the hiatus.
The filing deadline is the constraint. WOTC requires the certification request to be submitted within a short window after the start date — historically 28 days. That deadline does not pause because the program has. If Congress reauthorizes retroactively and you did not file within the window for your 2026 hires, the credit is gone for those hires regardless.
The recommended approach: treat 2026 hires the same as 2025 hires for paperwork timing, submit forms even where your state is not issuing determinations for 2026 start dates yet, and maintain a hiatus log recording start dates, submission dates and confirmation receipts.
The cost of doing this is a few minutes per hire. The cost of not doing it, if the credit returns, is the entire credit.
What might come back
Several proposals discussed in late 2025 and early 2026 would extend WOTC for multiple years, potentially with higher credit percentages, expanded eligibility to additional worker categories, and adjustments making the incentive more impactful. None of this is law until legislation is enacted.
Employers should monitor updates from the IRS, the Department of Labor, and their state workforce agency rather than relying on secondary reporting — including this page.
What this means for hiring decisions
Here is where we would push back on a common reaction.
If the availability of a tax credit was the reason you were hiring a particular candidate, the hiring process had a problem before the credit lapsed. WOTC reduces the cost of a hire; it does not make an unsuitable hire suitable, and it never covered more than a fraction of the cost of employing someone.
The business case for recruiting from this talent pool does not rest on the credit:
- A larger candidate pool. Employers who make their process accessible see applicants that competitors never reach.
- Retention. Employers frequently report longer tenure, which is where the real money is — see what turnover actually costs.
- Accommodation costs are usually low. Most workplace accommodations cost nothing at all. See accommodations that cost nothing.
- Existing employees. A meaningful share of any workforce acquires a disability during their working life. How you handle accommodation determines whether you keep experienced people or replace them.
A credit that comes back is a bonus on a decision that was already sound.
Other incentives that have not lapsed
WOTC is the best known and not the only one. Depending on your situation, other federal and state provisions may apply — including tax provisions aimed at the cost of removing architectural and transportation barriers, and provisions aimed at accommodation and accessibility expenditures for smaller businesses.
Eligibility rules, caps, and definitions for each are specific, and several have not changed. Confirm current details with your tax adviser and your state workforce agency rather than working from a summary — this is exactly the area where out-of-date guidance circulates.
Many states also operate their own hiring credits and wage subsidy programmes, often administered through the vocational rehabilitation agency. Those are unaffected by the federal lapse. See how vocational rehabilitation works.
A short checklist for the hiatus
- [ ] Keep WOTC screening in your onboarding process
- [ ] File certification requests within the normal deadline for every 2026 hire
- [ ] Submit even where your state returns a pending status
- [ ] Keep a hiatus log: start date, submission date, confirmation receipt
- [ ] Assign one person to monitor DOL, IRS and your state workforce agency
- [ ] Check which state-level credits apply to you — those are still running
- [ ] Do not build hiring plans around a credit that is not currently law
We will update this page
When WOTC is reauthorized, allowed to lapse permanently, or replaced, we will update this page with the date and what changed.
Until then: keep filing.