Work Opportunity Tax Credit (WOTC) Additional Funding Allotments for Fiscal Year 2025

The U.S. Department of Labor’s Employment and Training Administration (ETA) has issued Change 1 to Training and Employment Guidance Letter (TEGL) No. 08-24, which outlines the Fiscal Year (FY) 2025 Work Opportunity Tax Credit (WOTC) funding allotments for State Workforce Agencies (SWAs). This update provides additional funding details based on a second continuing resolution (CR#2) that appropriates funding through March 14, 2025. The TEGL details the methodology for state allotments, requirements for applying for funding, and expectations for reporting and program execution. The Work Opportunity Tax Credit (WOTC) is authorized under section 51 of the Internal Revenue Code of 1986 (26 U.S.C. § 51) and is extended through December 31, 2025, under the Consolidated Appropriations Act, 2021. The program is designed to provide tax incentives to employers who hire individuals from targeted groups who face barriers to employment. The U.S. Department of the Treasury, through the Internal Revenue Service (IRS), oversees the tax-related provisions, while the Department of Labor funds state agencies to administer the program. For FY 2025, the initial WOTC funding allotments under CR#2 amount to $4,253,398. The funding formula is based on prior fiscal year allotments, with 40% allocated based on certifications issued, 40% on denials issued, and 20% on each state’s share of the civilian labor force. States must submit applications for funding within 30 calendar days from the issuance of this TEGL. The required application, SF-424 (Application for Federal Assistance), must be submitted electronically via Grants.gov and include specific details such as the funding opportunity number and the state’s unique entity identifier. SWAs are responsible for administering the WOTC by verifying eligibility for tax credits, issuing employer certifications or denials, maintaining record-keeping and reporting processes, and working to eliminate certification backlogs. States must submit quarterly financial and performance reports through designated federal reporting systems. The grant does not typically allow for subrecipient funding, though exceptions may be requested. The intended beneficiaries of this funding include both job seekers and employers. The program aims to increase employment opportunities for individuals facing barriers to workforce entry while helping businesses reduce hiring costs through tax incentives. SWAs, employers, and job seekers also receive support from partner agencies within the Workforce Innovation and Opportunity Act (WIOA) network.