S. 3265 — Improve and Enhance the Work Opportunity Tax Credit Act

This section extends the Work Opportunity Tax Credit (WOTC)—which provides employers a tax credit for hiring individuals from targeted groups (e.g., veterans, long-term family assistance recipients, SNAP recipients, summer youth)—through December 31, 2030 (from December 31, 2025); enhances the credit to 50% of qualified first-year wages up to $6,000 plus (for employees with at least 400 hours of service) 50% of such wages exceeding $6,000 up to $12,000 (from 40% up to $6,000); provides for inflation adjustment of the $6,000 and $10,000 wage caps after 2025 using CPI chained to 2024; removes the age-40 limit for qualified SNAP recipients; and makes conforming changes to credit limitations for veterans (to 200-400% of the $6,000 cap, depending on veteran status), long-term family assistance recipients (40% up to $10,000 first-year wages and 50% up to $10,000 second-year wages), summer youth employees (40% of capped first-year wages, with reductions or exclusions for certain at-risk youth), agricultural and railway labor (tied to inflation-adjusted caps), and short-term employees (50% rate). The changes apply to individuals who begin work after December 31, 2025.

This section expands eligibility for the Work Opportunity Tax Credit—under which employers may claim a tax credit equal to 40% of the first $6,000 in wages (up to $2,400) paid to employees from certain targeted groups with employment barriers—to include qualified military spouses (i.e., spouses of members of the Armed Forces certified by a designated local agency as of the hiring date). The provision applies to wages paid after the date of enactment to individuals who begin work for the employer after such date.

This section directs the Secretaries of the Treasury, Commerce, and Labor, and the Small Business Administration Administrator (or their delegates), in consultation with each other and consistent with applicable law, to promote hiring of targeted group members (as defined in IRC §51(d), i.e., individuals eligible for the Work Opportunity Tax Credit such as veterans, long-term family assistance recipients, and ex-felons) to business leaders across critical industry sectors including manufacturing, infrastructure, energy, health care, and construction.