The Federal Work Opportunity Tax Credit (WOTC) and Welfare-to-Work Tax Credit replaced the Targeted Jobs Tax Credit in 1997. These programs joined other incentive programs to help move people from welfare to gainful employment, obtain on-the-job-experience, and provide employers tax credits for hiring people from these various targeted groups.

On December 20, 2006, President Bush signed into law the Tax Relief and Health Care Act of 2006. This legislation merged the Welfare-to-Work Tax credit into the WOTC, implementing a number of significant changes and provisions. Five months later, Congress passed additional legislation extending the WOTC Program for a 44-month period through August 31, 2011.

The employer tax credit for the newly consolidated WOTC can be as much as:

$2,400 for each new adult hire
$1,200 for each new summer youth hire
$9,000 for each new long-term family assistance recipient hired over a two-year period

All new adult employees must work a minimum of 120 or 400 hours and individuals hired as Summer Youth employees must work at least 90 days (between May 1 and September 15) before an employer is eligible to claim the tax credit.

The nine individual groups include qualified Veterans, qualified short and long term welfare recipients, qualified designated community residents, qualified vocational rehab referrals, qualified food stamp recipients, qualified supplemental security income recipients, qualified Summer Youth employees, and qualified ex-felons (see details of groups at www.doleta.gov).