Why the Work Opportunity Tax Credit (WOTC) Deserves Permanency in the Tax Code
Since its inception in 1978 under the Targeted Jobs Act, the Work Opportunity Tax Credit (WOTC) program has been a cornerstone of policies designed to promote inclusive hiring and support underserved communities. Renamed and revamped in 1996 by President Bill Clinton, WOTC has stood the test of time, helping employers bridge the gap for individuals who face barriers to employment while boosting business efficiency and driving economic growth.
However, despite its proven track record and bipartisan support, WOTC remains a temporary program, requiring periodic renewal. This uncertainty not only hampers long-term planning for businesses but also risks undermining the program’s broader impact. As we approach December 2025, when WOTC is once again up for renewal, it’s time to ask: Why isn’t WOTC a permanent fixture in our tax code like the Research and Development (R&D) Tax Credit?
A Long History of Supporting Employment
WOTC’s legacy dates back more than four decades, rooted in the belief that everyone deserves a fair shot at employment.
- 1978: President Jimmy Carter enacted the Targeted Jobs Tax Credit to incentivize hiring individuals from disadvantaged groups.
- 1996: President Clinton renamed and restructured the program as WOTC, focusing on targeted groups, including veterans, individuals on government assistance, and the formerly incarcerated.
- Present: WOTC has grown into a bipartisan success story, with lawmakers from both sides of the aisle supporting its continuation and even advocating for permanency.
This enduring bipartisan support underscores the program’s importance in creating opportunities for individuals and addressing workforce challenges.
Bridging the Gap for Disadvantaged Employees
WOTC provides an essential bridge for individuals who face barriers to employment, offering pathways to financial independence and career growth.
- Targeted Groups: WOTC focuses on populations that historically struggle to find stable employment, including veterans, individuals with disabilities, and those transitioning off public assistance.
- Skills Development: In industries like light industrial and temporary staffing, WOTC offsets the costs of “up-skilling” job seekers, providing them with the tools needed to thrive in today’s workforce.
- Catalyst for Full-Time Employment: Temporary staffing agencies leverage WOTC to give workers a chance to transition into permanent roles, transforming short-term opportunities into long-term careers.
By addressing systemic barriers, WOTC not only uplifts individuals but also strengthens communities and local economies.
Boosting Business Efficiency and Reducing Costs
WOTC doesn’t just benefit employees—it’s also a game-changer for employers.
- Cost Reduction: In industries like trucking, where recruiting and onboarding a single driver can cost thousands of dollars, WOTC provides significant tax savings that offset these expenses.
- Workforce Stability: By incentivizing inclusive hiring, WOTC helps employers build diverse, reliable teams, reducing turnover and improving morale.
- Scalability: For large-scale operations, such as staffing firms, WOTC makes it financially viable to hire and train workers who might otherwise be overlooked, creating a sustainable talent pipeline.
The Case for Permanency
Unlike other programs, such as the Research and Development Tax Credit, which was made permanent in 2015, WOTC continues to face uncertainty with its periodic renewals. This lack of permanency poses several challenges:
- Business Planning: Employers are unable to reliably incorporate WOTC into long-term hiring and tax strategies.
- Underutilization: Awareness and adoption of WOTC remain inconsistent, partly due to its temporary status.
- Missed Opportunities: Temporary renewals prevent the program from reaching its full potential in addressing systemic employment issues.
Given its decades of success and bipartisan support, it makes little logical sense to keep WOTC as a temporary program. Permanency would eliminate uncertainty, enabling businesses to fully leverage its benefits while providing a stable framework to support disadvantaged workers.
Bipartisan Momentum for Change
Recent legislative efforts reflect growing consensus around the need for WOTC permanency:
- Both Democratic and Republican lawmakers have introduced bills aimed at making WOTC a permanent part of the tax code.
- Policymakers recognize that WOTC aligns with broader goals of reducing unemployment, improving workforce diversity, and fostering economic growth.
Permanency would signal a long-term commitment to inclusive employment practices, solidifying WOTC’s role as a cornerstone of workforce development policy.
Conclusion: The Time for Permanency Is Now
The Work Opportunity Tax Credit has proven its value over decades, helping employers reduce costs, empowering employees, and strengthening communities. As industries like trucking, light industrial staffing, and others continue to face workforce challenges, WOTC offers a practical, effective solution.
With its long history, bipartisan support, and clear economic and social benefits, there is no justification for delaying WOTC’s permanency. Making WOTC a permanent fixture in our tax code would ensure its continued success, providing certainty for employers and opportunities for employees for generations to come.
The time to act is now—before December 2025—to secure WOTC’s future and reaffirm our commitment to building an inclusive, resilient workforce.
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