Work Opportunity Tax Credit, Empowerment Zones, and Indian Credits Extended

To find the latest information on this topic, read Three Tax Credit Opportunities Extended: WOTC, Federal Empowerment Zone and Indian Employment Credits.


On December 20, 2019, HR 1865 was signed into law, effectively extending three federal credits, discussed below, through December 31, 2020.


Work Opportunity Credit

The Work Opportunity Tax Credit (WOTC) is a federal tax credit available to employers for hiring individuals from certain targeted groups who have consistently faced significant barriers to employment.

WOTC joins other workforce programs that incentivize workplace diversity and facilitate access to good jobs for American workers.


Empowerment Zone Employment Credit

The tax credit for certain employers that operate in an empowerment zone has been extended through December 31, 2020. Under this credit, an employer may claim a 20-percent credit on up to the first $15,000 of wages paid to certain employees.  Substantially all of the services must be provided in the employer’s trade or business within an empowerment zone, and the employee’s principle residence while providing the services must be within the empowerment zone. This extension is retroactive to January 1, 2018.


Indian Employment Credit

In general, the Indian Employment Credit may entitle an employer to a 20-percent tax credit on a portion of the qualified wages and employee health insurance costs paid to an enrolled member of an Indian tribe or the enrolled member’s spouse.  To qualify, substantially all of the services must be performed by such an employee within an Indian reservation, and the employee’s principle residence while providing the services must be on or near the reservation where the services are performed.


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