Federal and State Hiring Credits
Supporting and hiring statistically disadvantaged professionals from differing backgrounds may be part of your business culture and values, but it could also help you increase your cash flow and reduce federal income tax liability.
The federal government and several states allow businesses to claim tax credits for certain eligible individuals and for conducting business in specifically designated areas.
Leveraging these credits without insight from experienced advisors can be a time-consuming process that poses administrative burdens. Confidently pursue credits and put money back into your business with guidance from our professionals.
Credit and Savings Opportunities
There are many credit opportunities to pursue at both the federal and state level, but your business and employees must meet certain requirements.
Work Opportunity Tax Credit
The Work Opportunity Tax Credit (WOTC)—a federal credit distributed at the state level—is designed to encourage businesses to hire individuals receiving government assistance to enable them to become more self-sufficient.
Savings Range
Maximum available credits can range from $2,400 to $9,600 per new employee, depending on how the employee qualifies.
Credit value is determined by:
- The group under which the employee qualifies
- Number of hours worked
- Wages earned during the employment period
Eligible Employees
Potential eligible employee groups include:
- Members of families that receive Supplemental Nutrition Assistance Program (SNAP) benefits, long-term Temporary Assistance to Needy Families (TANF), or Aid to Families with Dependent Children (AFDC)
- Qualified unemployed or disabled veterans
- Qualified ex-felons or pardoned, paroled, or work-release individuals
- Individuals who’ve completed or are completing vocational rehabilitation programs
- Qualified summer youth—employed only during the period between May 1 through September 15—ages 16 or 17 years-old living in an empowerment zone
- Individuals receiving Supplemental Security Income
- Residents of designated communities, including individuals living within a rural renewal county
- Individuals who were unemployed for at least 27 consecutive weeks and received unemployment compensation under state or federal law during this period
Credits must be applied for within 28 days of a new employee’s start date.
State Hiring Credits
Many states offer their own WOTC-equivalent opportunities. The amount of credit and the type of tax they offset varies by state. Explore prominent state opportunities below.
Alaska
Claim an income tax credit of up to $3,000 for the first taxable year for employing new, full-time, qualified veterans.
Arizona
Claim an income tax credit for each qualified new employee who is a TANF recipient of up to:
- $500 in year one
- $1,000 in year two
- $1,500 in year three
Illinois
Claim an income tax credit of up to $1,500 for each qualified felon who was convicted in Illinois, sentenced to a period of incarceration, and hired within three years of being released.
New York
Claim a franchise tax credit of up to $2,100 for the first taxable year for employing new full- or part-time qualified, disabled employees.
Texas
Claim a state sales and use tax refund up to $2,500 per employee with additional benefits for companies making large capital investments over a five-year period by participating in the Texas Enterprise Zone Program.
Alaska
Claim an income tax credit of up to $3,000 for the first taxable year for employing new, full-time, qualified veterans.
Arizona
Claim an income tax credit for each qualified new employee who is a TANF recipient of up to:
- $500 in year one
- $1,000 in year two
- $1,500 in year three
Illinois
Claim an income tax credit of up to $1,500 for each qualified felon who was convicted in Illinois, sentenced to a period of incarceration, and hired within three years of being released.
New York
Claim a franchise tax credit of up to $2,100 for the first taxable year for employing new full- or part-time qualified, disabled employees.
Texas
Claim a state sales and use tax refund up to $2,500 per employee with additional benefits for companies making large capital investments over a five-year period by participating in the Texas Enterprise Zone Program.
Other states offer similar hiring credits that may require more specific qualifications.
How to Claim Your Credits
Using the industry-leading digital tool MaxCredits®, you can vastly streamline the process to leverage credits. With guidance from our team, the process will help:
- Seamlessly Confirm Eligibility. New employees securely enter relevant personal information into MaxCredits® and answer questions to determine whether they qualify your business for tax credits.
- Securely Apply for Credits. Qualifying businesses can use the IRS-approved DocuSign® platform to electronically sign applications for relevant credits—driving enhanced cybersecurity and increased compliance around your data and requests.
- Expand Potential Savings. Save additional time and money by simultaneously screening for other federal and state credits for which you might be eligible based on provided information.
MaxCredits® can be implemented into your new employee onboarding to help your business capture available tax credit opportunities.
We’ll perform all necessary processing and filing of qualified applications, data retention, denial appeals, and other requirements to help your business to improve tax credit opportunities.
Expansive Expertise
Your engagement team will include professionals from a range of backgrounds—such as CPAs, attorneys with JD-LLM certifications, and enrolled agents—with deep experience analyzing, documenting eligibility, and helping businesses claim hiring and wage-based tax credits.
Our professionals will customize your unique needs while contextualizing how credits could impact and benefit your whole business.
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