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Democratic Lawmakers Look to Strengthen Work Opportunity Tax Credit

Posted on May 21, 2021

A larger work opportunity tax credit would help disadvantaged groups hit by the COVID-19 pandemic under legislation introduced by five House Ways and Means Committee Democrats.

The Hiring Incentive to Return Employment (HIRE) Act of 2021 would increase the work opportunity tax credit to 50 percent for the first $10,000 in wages for all groups targeted by the credit for two years, according to a May 20 release from Rep. Thomas R. Suozzi D-N.Y., who introduced the bill with fellow Democratic taxwriters Steven Horsford of Nevada, Donald S. Beyer Jr. of Virginia, Bradley Scott Schneider, of Illinois, and Gwen Moore of Wisconsin.

“This enhancement of the Work Opportunity Tax Credit would help put Americans back to work as the country recovers from the pandemic, and directly assist the long-term unemployed, who were left behind by our economy even before the pandemic began,” said Beyer in a statement.

The work opportunity tax credit is available to employers if they hire from a list of disadvantaged groups. The Consolidated Appropriations Act, 2021 (P.L. 116-260), authorized the extension of the credit until December 31, 2025.

Under section 51(a), the amount of the work opportunity tax credit for the tax year is equal to 40 percent of the qualified first-year wages for that year.

The credit amount hasn’t changed since its initial enactment 25 years ago, the release states, adding that because of wage inflation, the value of the credit has eroded and placed qualifying employees at a disadvantage at a time of high unemployment.

Targeted groups for the credit include former felons, qualified veterans, long-term unemployment recipients, and some Supplemental Nutrition Assistance Program recipients.

“The pandemic has exacerbated long-term unemployment, putting more people at risk of becoming locked out of the jobs market through no fault of their own,” said Moore in a statement. She added that improvements to the work opportunity tax credit, such as expanding it to cover rehired employees, can help people with employment barriers find work as the economy reopens.

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