Under current IRS guidance, employees who began work for an employer after December 31, 2025, do not qualify for the Work Opportunity Tax Credit (WOTC). The IRS also says Form 8850 is no longer in use. The ten target groups below apply to hires during the program’s authorized period; they do not make a 2026 hire eligible unless Congress has extended the credit. See the IRS status notice dated March 19, 2026.
Who qualified for WOTC during its authorized period?
For an eligible hire during the authorized period, the employee had to be certified as belonging to one of ten statutory target groups. Membership was based on specific tests—not simply on a broad identity such as being a veteran, having a disability, or having a criminal record. Depending on the group, the test could involve benefit history, age, residence, unemployment duration, conviction or release date, or referral to rehabilitation services.
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The IRS’s WOTC program page and Instructions for Form 8850 describe the operative categories and their criteria. The table summarizes the main tests; the instructions contain detailed definitions and alternatives.
| Target group | Main eligibility test |
|---|---|
| Qualified IV-A recipient (TANF) | A member of a family that received assistance under a state program funded under part A of title IV of the Social Security Act relating to Temporary Assistance for Needy Families for at least 9 months during the 18-month period ending on the hire date. |
| Qualified veteran | Met at least one statutory test. These included family SNAP receipt for at least 3 months during the 15-month period ending on the hire date; unemployment totaling at least 4 weeks but less than 6 months in the prior year; unemployment totaling at least 6 months in the prior year; or specified tests involving service-connected disability and discharge or unemployment timing. The Form 8850 instructions define who counts as a veteran for this credit. |
| Qualified ex-felon | Had a federal or state felony conviction and was hired no more than 1 year after conviction or release from prison for that felony. |
| Designated community resident | Generally, was age 18 to under 40 and lived in an empowerment zone or rural renewal county on the hire date. Applicable designations should be checked in the Form 8850 instructions for the relevant period. |
| Vocational rehabilitation referral | Had a physical or mental disability and was referred while receiving, or on completion of, qualifying rehabilitation services through an approved state plan, a Ticket to Work employment network plan, or a VA program. |
| Qualified summer youth employee | Generally, was age 16 or 17 under the statutory timing rule, performed services for the employer between May 1 and September 15, and resided in an empowerment zone. Specific age and employment conditions apply. |
| Qualified SNAP recipient | Generally, was age 18 to under 40 on the hire date and a member of a family receiving SNAP for the previous 6 months or at least 3 of the previous 5 months. |
| Qualified SSI recipient | Received Supplemental Security Income for a month ending within the 60-day period ending on the hire date. |
| Long-term family assistance recipient | Met specified extended TANF receipt tests, or recently stopped qualifying because a federal or state time limit ended payments. The Form 8850 instructions set out the alternative tests and two-year periods. |
| Qualified long-term unemployment recipient | Was unemployed for at least 27 consecutive weeks at hiring and received unemployment compensation during some or all of that unemployment period. |
What the criteria mean for a particular worker
The groups use different eligibility bases and lookback periods, so one category cannot be substituted for another. A worker might meet a benefit-history test without meeting an age or residence test; another might qualify through a referral or a particular unemployment period. For example, being a veteran alone did not establish eligibility: the veteran had to meet one of the statutory tests, and the employer’s request still had to be certified.
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For an individual case, use the instructions applicable to the hire period and identify the specific target-group test before treating the person as eligible. Older forms or instructions may not reflect later legal changes or agency notices.
What employers had to do for eligible hires
During the authorized period, an employee’s self-identification or an employer’s submission by itself did not establish WOTC eligibility. The employer and applicant had to complete Form 8850 on or before the day a job offer was made. The employer generally had to submit it to the state workforce agency for the state where the employee worked no later than the 28th day after the employee began work. State workforce agency certification was required, and the employee also had to satisfy the applicable minimum-hours rule.
- Prescreen by offer day: The employer and applicant completed Form 8850 on or before the date the job offer was made.
- Submit the certification request: The employer generally sent Form 8850 to the state workforce agency for the state where the employee worked within 28 days after the employee began work.
- Meet the group’s documentation and hours requirements: The agency determined whether the worker met the applicable target-group criteria; the employee also had to meet the minimum-hours rule. For the long-term unemployment group, DOL guidance describes use of ETA Form 9175.
These are historical procedures for hires within the authorized period. The IRS now says Form 8850 is no longer in use. For background on the former process, see the IRS FAQ and DOL filing guidance.
How the historical credit amount was described
The IRS FAQ described the general historical credit as 40 percent of qualified wages for an employee who performed at least 400 hours in the first year. That calculation applied to the former program and should not be read as a credit for employees who started after December 31, 2025.
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