As economic developers, we’re always on the lookout for incentive programs we can utilize to sweeten the deal. So today we’re going to talk about The Work Opportunity Tax Credit (WOTC).
The WOTC is a federal income tax credit available for employers who hire individuals from certain targeted groups. It has been around for a while and was set to expire at years-end 2014, but it was reauthorized through 2019 this past December.
There are eight targeted groups who qualify for WOTC, including (but not limited to):
- TANF/SNAP recipients
- Rural Renewal Counties (RNC)
- Ex-felons, etc. (see complete list here)
The Rural Renewal Counties target group is especially where we want to draw your attention. Twenty-four South Dakota counties (see map) qualify as part of the rural renewal target group so, essentially, a company looking to hire people living in these 24 counties, can qualify for the WOTC tax credit on wages paid to those people. The employer doesn’t have to be located in an RNC, but the employee must reside in the RNC.
For example a company in Watertown (Codington CTY) could claim a WOTC credit for each new hire who lives/resides in Day, Grant, Duel, Kingsbury, or Clark County.
Towards the end of June the IRS issued guidance on how to claim the credits, including how to go about retroactively claiming the credits for 2015 new hires who would have qualified. The credit is generally 40% of the first $6,000 in wages paid (up to $2,400 per qualified new hire).
If any business has questions as to how WOTC works, the South Dakota Department of Labor and Regulation is a good place to start.
South Dakota Contact:
South Dakota Department of Labor and Regulation
420 South Roosevelt Street
P.O. Box 4730
Aberdeen, SD 57402-4730
Phone: 605.626.7652, extension 4415
South Dakota WOTC webpage