Good morning. If you've been clawing back a few thousand dollars on certain hires, check the calendar. That credit quietly ran out at the end of last year — and it's not dead, but if you drop one piece of first-day paperwork, you'll lose it for this year's hires even when it comes back.
Top story: the hiring credit lapsed — but the paperwork can't
The Work Opportunity Tax Credit — the federal credit that pays you for hiring from certain groups — expired on December 31, 2025, and Congress hasn't renewed it. The Department of Labor's own page still reads that WOTC "is authorized until December 31, 2025," and the IRS limits the credit to workers who "begin work on or before December 31, 2025." So for anyone you've hired in 2026, the credit is in limbo.
Here's the part that costs money. WOTC has lapsed and come back many times before, usually retroactively — covering the whole gap. State workforce agencies are still taking certification requests during the hiatus; they just won't rule on 2026 hires until Congress acts. But the filing clock never paused. Miss the window on a hire now, and you can't claim the credit for that person later — even if the program is renewed to cover the exact stretch you hired them in. The shops that keep filing hold their place in line. The shops that stopped get nothing for those hires.
Quick hits
What it's worth. Up to $2,400 per eligible hire — 40% of the first $6,000 in wages once the worker passes 400 hours, or a 25% rate for 120 to 399 hours (IRS). For certain qualified veterans it runs higher: up to $9,600, on as much as $24,000 in wages.
Who counts — you're probably already hiring them. Ten targeted groups qualify, and several are ordinary parts of a trades hiring pool: people unemployed 27 weeks or more, veterans, SNAP (food-stamp) recipients, and workers with a past felony conviction (IRS). The credit doesn't ask you to hire differently — it rewards documenting the hires you'd make anyway.
The 28-day clock didn't go on hiatus. You still have to get Form 8850 to your state workforce agency within 28 calendar days of a new hire's start date (IRS). Screen on day one, not at tax time — past 28 days, that hire is permanently ineligible, renewal or not.
The Tip: keep screening through the hiatus
Don't drop WOTC screening just because the credit's paused — that's the mistake that turns a backdated windfall into nothing. Build it into onboarding: every new hire fills out Form 8850 on their first day, and you send it to the state workforce agency inside 28 days, hiatus or not. The agencies are logging 2026 requests and will process them if Congress reauthorizes, which it has done repeatedly. It's a few minutes per hire to stay eligible for a credit worth up to $2,400 a head — and if the program comes back retroactive, you collect the whole stack at once instead of watching it expire hire by hire.
Tool watch: [Not sponsored]
The IRS's Form 8850 (the pre-screening and certification request) and its Work Opportunity Tax Credit page lay out the whole program in plain terms — who qualifies, the amounts, and the 28-day deadline. The Department of Labor's WOTC page is where the current authorization status shows up. And your state workforce agency's WOTC page is the third stop: it's where the form actually goes, and where any hiatus or reauthorization notice lands first. All free, all authoritative — read them before you hand a WOTC-screening vendor a cut of credits you can file for yourself.
That's the callout. See you next time.
The Callout — the business brief for the trades. We label every commercial placement: [Sponsor], [Affiliate], or [Not sponsored]. Today's Tool watch is our own honest read: no one paid for it, and the only things named are free IRS, DOL and state-agency pages. 231J Ramparts Road, Te Anau 9600, New Zealand · Unsubscribe anytime. Nothing in The Callout is tax, legal or financial advice. Whether a given hire qualifies for WOTC, and how to claim it, is a decision for you and your own tax professional. The credit's authorization status can change; confirm it before you rely on it.
Sources
Internal Revenue Service — "Work Opportunity Tax Credit," irs.gov: the credit is "equal to 40% of up to $6,000 of wages paid to … an individual who … performs at least 400 hours of services," so "the maximum tax credit is generally $2,400"; "a 25% rate applies to wages for individuals who perform fewer than 400 but at least 120 hours of service"; "up to $24,000 in wages may be taken into account in determining the WOTC for certain qualified veterans"; lists the ten targeted groups; employers must submit Form 8850 to the state workforce agency "no later than 28 calendar days from the new employee's start date"; the credit is available "for wages paid to certain individuals who begin work on or before December 31, 2025." https://www.irs.gov/businesses/small-businesses-self-employed/work-opportunity-tax-credit
U.S. Department of Labor, Employment and Training Administration — "Work Opportunity Tax Credit," dol.gov: "WOTC is authorized until December 31, 2025 (Section 113 of Division EE of P.L. 116-260 – Consolidated Appropriations Act, 2021)." https://www.dol.gov/agencies/eta/wotc
Internal Revenue Service — "About Form 8850, Pre-Screening Notice and Certification Request for the Work Opportunity Credit," irs.gov: employers use Form 8850 to pre-screen and request that the state workforce agency certify an individual as a member of a targeted group. https://www.irs.gov/forms-pubs/about-form-8850
CLA (CliftonLarsonAllen) — "Leveraging Tax Incentives for Business Growth: A Guide to WOTC and the Current Hiatus," claconnect.com (cited for the hiatus-period filing practice, corroborating the DOL/IRS authorization dates above): WOTC "officially expired on December 31, 2025, placing the program in a temporary hiatus until Congress enacts a renewal"; employers "should continue to submit timely applications throughout the hiatus," and 2026-hire requests "may be submitted and logged but will not receive determinations until reauthorization." https://www.claconnect.com/en/resources/articles/24/leveraging-tax-incentives-for-business-growth-a-guide-to-wotc
All IRS and DOL pages read first-hand on 2–3 October 2026 (US/NZDT).