H.R. 1177 — Improve and Enhance the Work Opportunity Tax Credit Act

This section establishes the short title of the Act as the “Improve and Enhance the Work Opportunity Tax Credit Act.”

This section revises the work opportunity tax credit under section 51 of the Internal Revenue Code of 1986 for individuals who begin work for an employer after December 31, 2024. It increases the general credit rate to 50 percent of qualified first-year wages up to $6,000, plus 50 percent of qualified first-year wages above $6,000 and up to $12,000 for individuals who complete at least 400 hours of service, compared with the current 40 percent rate. (Thus, the maximum general credit increases to $6,000 from $2,400 for most eligible workers and to $9,000 from $2,400 for workers with at least 400 hours of service.) This section also increases the wage caps for certain qualified veterans from $6,000 and $12,000 to: (1) $12,000 and $24,000 for veterans described in section 51(d)(3)(A)(ii)(I), (2) $14,000 and $28,000 for veterans described in section 51(d)(3)(A)(iv), and (3) $24,000 and $48,000 for veterans described in section 51(d)(3)(A)(ii)(II). It makes conforming changes so that, for individuals who do not meet the minimum employment period, the credit applies only to subsection (a)(1) wages and the applicable rate is 50 percent instead of 40 percent. The section revises the special rule for summer youth employees by providing a 40 percent credit on qualified first-year wages, with a reduced 25 percent rate for certain individuals described in section 51(i)(3)(A), no credit for individuals described in section 51(i)(3)(B), and a $3,000 annual wage cap. It also revises the special rule for long-term family assistance recipients by providing a 40 percent credit on up to $10,000 of qualified first-year wages and a 50 percent credit on up to $10,000 of qualified second-year wages, and changes the heading for that subsection to “Special rules for determining credit.”

This section revises the work opportunity tax credit under 26 U.S.C. § 51 by removing the upper age limit for qualified supplemental nutrition assistance program benefits recipients, so that the credit may apply to eligible individuals without regard to whether they are under age 40. (Thus, employers may claim the credit for hiring qualifying SNAP recipients who begin work after December 31, 2024, regardless of age.)