The WOTC Hiatus Explained: Compliance, Continuity, and What Comes Next

A practical employer guide to managing WOTC risk and opportunity in 2026 

WOTC in 2026: What the Hiatus Means for Employers

As 2026 unfolds, many employers are navigating a familiar but challenging scenario: the Work Opportunity Tax Credit (WOTC) expired at the end of 2025, and Congress has not yet acted on a renewal. For organizations that rely on WOTC to offset hiring costs and support inclusive employment practices, this creates both operational uncertainty and strategic risk.

History suggests that WOTC is more likely to return than disappear. Since its creation in 1996, the credit has expired and been extended multiple times—often retroactively. However, the timing and scope of renewal are never guaranteed. That makes disciplined compliance, documentation, and workforce planning essential during any hiatus period.

Why WOTC Still Matters—Even During a Hiatus

Before its expiration, WOTC allowed employers to claim up to $9,600 per eligible hire from targeted groups, including qualified veterans, individuals with prior convictions, SNAP recipients, and long-term family assistance recipients. For high-volume and frontline employers, this translated into meaningful reductions in net hiring costs.

According to the U.S. Department of Labor, more than 40 million WOTC certifications have been issued since the program’s inception, reflecting its broad adoption across industries. In FY 2023 alone, nearly 2 million certifications (1,982,858) were processed nationwide, despite persistent state backlogs and administrative constraints.

Beyond employer savings, WOTC has demonstrated measurable workforce impact. Research from RAND found that an earlier expansion of WOTC increased employment among disabled veterans by about two percentage points — roughly 32,000 jobs annually — and boosted their annual income by approximately 40 percent, reinforcing the program’s role in connecting employers with underrepresented talent pools.

Understanding the Hiatus: What Changed After December 31, 2025

WOTC is a temporary provision of the Internal Revenue Code and requires periodic reauthorization by Congress. Its expiration at the end of 2025 reflects legislative timing—not a policy decision to eliminate the credit.

Several factors influence the current pause:

• Legislative prioritization: Broader tax and spending negotiations often delay extender programs.

• Political dynamics: Although historically bipartisan, tax credits face increased scrutiny.

• Program design: Temporary credits are inherently vulnerable to gaps between extensions.

The key takeaway for employers: a hiatus pauses new certifications, not the importance of compliance readiness.

What Employers Should Continue Doing in 2026

1. Continue Screening New Hires

Employers should continue WOTC screening at the time of hire, even during a hiatus. Completing pre-screening ensures the required information is captured accurately and on time. If Congress authorizes a retroactive renewal—as it has in prior cycles—employers with complete records are best positioned to benefit.

The IRS and DOL both emphasize timely documentation as a prerequisite for any future credit claim.
Read the IRS WOTC guidance to stay up to date.

2. Submit Applications Where State Systems Allow

State Workforce Agency (SWA) policies vary during a hiatus. Some states continue accepting applications and hold them pending renewal; others pause processing. Maintaining submission activity where permitted creates an official record and reduces future administrative burden.

3. Track Payroll and Workforce Data

Even when certifications pause, payroll tracking does not. Accurate wage and hours data are required to calculate credits once certifications resume. Maintaining clean HR and payroll data protects downstream eligibility and audit defensibility.

4. Monitor Certifications for Pre-Expiration Hires

For employees hired on or before December 31, 2025, states continue reviewing timely submissions. Certifications may still be issued throughout 2026, and eligible credits may be claimed once certified.

5. Prepare for Multiple Legislative Outcomes

Several bills introduced in Congress propose to modernize and expand WOTC, including increased credit percentages, higher wage caps for veterans, and expanded eligibility for youth and military spouses. While none are guaranteed, employers should plan for scenarios that include:

• Retroactive renewal

• Modified eligibility rules

• Delayed or partial extensions

Staying informed through official channels and trusted compliance partners is critical.
Given the uncertainty surrounding WOTC timelines, many employers are also reassessing how diversified their incentive strategy truly is.

Find the Congressional bill tracking here: https://www.congress.gov

Looking Beyond WOTC: Other Incentives Employers Should Evaluate

A WOTC hiatus does not eliminate all hiring-related incentives. Employers should also assess:

• State and local hiring credits that “piggyback” on WOTC eligibility

• Federal Empowerment Zone credits

• Paid Family and Medical Leave Credit (IRC §45S)

• Job creation, investment, and training incentives

Diversifying incentive strategies reduces reliance on a single program and supports more stable financial planning.

How Ryze Incentives Navigator Helps Employers Stay Ready

Periods of legislative uncertainty highlight the value of visibility and structure. Ryze Incentives Navigator by HRlogics gives HR, Finance, and Tax teams a centralized way to manage hiring incentives—during active programs and hiatus periods alike.

Key Benefits:

• Real-time discovery of 3,000+ federal and state incentives

• Workforce and location mapping to align hiring with eligibility

• Built-in estimators to model financial impact under different scenarios

• Audit-ready documentation tracking to support compliance

• Cross-team visibility that aligns HR and Finance around shared outcomes

By maintaining disciplined processes now, employers reduce risk and preserve optionality for future credit recovery.

Stay Prepared While the Program Pauses

A WOTC hiatus affects certification timing—not the need for compliance, planning, or data integrity. Employers that continue screening, submitting where possible, and tracking workforce data place themselves in the strongest position for whatever legislative outcome comes next.

Ready to bring clarity and structure to your tax credit strategy?
Schedule a demo today to discover how Ryze Incentives Navigator helps employers stay compliant, prepared, and financially positioned—no matter what Congress decides next.