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Workers with Disabilities Tax Credit

WOTC/WETC Fact Sheet

The Workers with Disabilities Tax Credit (WETC) is a New York State tax credit that can result in $2,100 for each individual hired. WETC is New York State's initiative to assist the disabled in securing employment. WETC is an employer-friendly benefit for businesses hiring workers with disabilities.

What are the advantages of the New York State tax credit WETC?

  • There is no limit to the number of hires
  • Employers decide whom to hire
  • Minimal paperwork to claim tax credit
  • Employers assist job seekers most in need of employment

What new hires qualify for the Workers with Disabilities Tax Credit?

An employee must meet the eligibility requirements for certification under the Work Opportunity Tax Credit (WOTC) program as a vocational rehabilitation referral, and

Be certified by the New York State Education Department's Adult Career and Continuing Education Services-Vocational Rehabilitation (ACCES-VR) or

Be certified by the Office of Children and Family Services' Commission for the Blind and the Visually Handicapped (CBVH)

What is the amount of the tax credit?

The tax credit equals 35% of the first $6,000 in wages paid during the second year of employment. Qualified wages are counted under the federal WOTC during the first year of employment. This means the employee is required to work for the employer for two years to qualify for the WETC.

What are the applicable taxes?

The tax credit may be used to offset New York tax liability under the insurance and bank franchise tax and transportation and transmission companies taxes.

The tax credit applies to tax years beginning after 1997 and to individuals who began to work for an employer after 1996.

WETC/WOTC Partnering for Employers

The Work Opportunity Tax Credit, in conjunction with Workers with Disabilities Tax Credit, is a wonderful opportunity for employers to gain from hiring individuals with disabilities. For the first year of employment, the federal tax credit WOTC is in effect. The tax credit is 40% of the first $6,000 in wages. The state tax credit WETC is in effect for the second year of employment and the amount of the tax credit is 35% of the first $6,000 in qualified wages for that year. Therefore, when WOTC is linked with WETC the total credit possible is $4,500.

Savings Scenarios

What are some of the savings scenarios?

Work Opportunity Tax Credit
Example 1-Company ABC

How much money can I earn from using this program?

Each qualified employee can generate tax savingsTax Savings Year 1Tax Savings Year 2
Each WOTC employee can generate up to: $2,400
A restaurant employing an 8 person crew (8 WOTC @ $2,400) $19,200
And if a Vocational rehabilitation client (WETC)
Each WETC employee can generate up to: $2,100
A restaurant employing an 8 person crew (8 WETC @ $2,100) $16,800
Total Potential Tax Savings $19,200 $16,800

How long does the person need to work?

A person needs to work 400 hours and earn at least $6,000 in wages to maximize the benefits

Average hourly wage @$7.25 per hour, work week @ 40 hour/five days ($290/week)

A partial WOTC credit, totaling up to $1,500, is available to employees who work between 120 and 399 hours


Long-Term Family Assistqnce - WOTC Tax Credit

Example 2-Company ABC

How much money can I earn from using this program?

Each qualified employee can generate tax savingsTax Savings Year 1Tax Savings Year 2
Each LTFA eemployee can generate up to: $4,000 $5,000
A restaurant employing an 8 person crew (8 WtW @ $4,000/$5,000) $32,000 $40,000
And if a Vocational rehabilitation client (WETC)
Each WETC employee can generate up to: $2,100
A restaurant employing an 8 person crew (8 WETC @ $2,100) $16,800
Total Potential Tax Savings $32,000 $56,800

How long does the person need to work?

To maximize the benefits a person needs to work 400 hours or 180 days, and

Earn at least $10,000 in wages the first and second year of employment

The work week tally @ 40 hours/five days=10 weeks or 180 days

Average hourly wage @ $7.25/hour ($290/week)

How do I designate my accountant to act as an intermediary in the process of obtaining federal and state wage tax credits?

An intermediary, such as an accountant or a management consultant, may act on behalf of an employer in the certification process. However, in order to act as an intermediary, the New York State Department of Labor must be provided with a notarized Power-of-Attorney. The Internal Revenue Service Form 2848, Power-of-Attorney and Declaration of Employer Representative, may be used for this purpose.

For questions, call 1-800-HIRE-992

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