A pending bipartisan bill led by Republican U.S. Rep. Lloyd Smucker (PA-11) would lead to job creation and reduce reliance on safety net programs, according to a new study released by the Allegis Group, a global leader in workforce and business solutions.
The Improve and Enhance the Work Opportunity Tax Credit Act, H.R. 1177, which Smucker sponsored Feb. 10 alongside five original bill cosponsors, would “directly support 350,000 new jobs,” according to the study, titled Economic activity supported by the Improve and Enhance the Work Opportunity Tax Credit Act.
Additionally, the report shows the legislation would increase federal revenue by an estimated $5.8 billion and reduce federal expenditure by an estimated $5.6 billion, while also adding $56 billion to GDP over 10 years.
“The Improve and Enhance the Work Opportunity Tax Credit Act is pro-growth and pro-worker,” said Smucker. “The Work Opportunity Tax Credit [WOTC] is a program that supports employers and employees as they reenter the workforce.
“I am committed to helping disadvantaged Americans get back to work by advancing legislation to improve this proven tool,” he added.
First established in 1996, the WOTC is a federal tax incentive designed to encourage employers to hire individuals from specific target groups that face barriers to employment. These groups include recipients of public assistance programs such as Temporary Assistance for Needy Families, the Supplemental Nutrition Assistance Program (SNAP), and Supplemental Security Income, as well as long-term unemployed individuals, former felons, qualified veterans, and other designated groups.
The credit amount is calculated as a percentage of qualified wages paid to eligible employees, with the specific percentage varying based on the target group and the number of hours worked. Under current law, WOTC is scheduled to expire at the end of 2025.
According to the study, legislative action over time has broadened the WOTC to include additional target groups. However, the maximum qualified wages used to calculate the credit have not been adjusted for inflation.
“As a result, the real (inflation-adjusted) value of the credit has declined over time,” says the study. “For instance, from 1997 to 2024, the Consumer Price Index for All Urban Consumers (CPI-U) rose by approximately 95 percent, meaning the tax benefit of the credit has effectively been cut in half.”
Toward remedying the situation, the proposed bill would modify several aspects of WOTC: it would increase the maximum eligible wages and credit percentages for certain target groups, based on hours worked and for working for longer periods, and it would expand WOTC eligibility to SNAP recipients aged 40 and older, according to the summary, in turn, enhancing and improving the WOTC.
Smucker also explained that the WOTC has not been updated since its enactment 27 years ago, and its value has been eroded significantly due to inflation.
Smucker introduced H.R. 1177 with his colleagues U.S. Reps. Steven Horsford (D-NV), Brian Fitzpatrick (R-PA-01), Mike Kelly (R-PA-16), Vern Buchanan (R-FL), and Tom Suozzi (D-NY). Originally, Fitzpatrick and Kelly joined Smucker in 2023 to introduce the bipartisan bill.
Companion legislation to H.R. 1177 was also introduced Feb. 10 by U.S. Sens. Bill Cassidy (R-LA) and Maggie Wood Hassan (D-NH).