The Work Opportunity Tax Credit expired on December 31, 2025. That is the fact. Here is what is equally true: Congress has reauthorized WOTC retroactively after every previous lapse in the credit’s history. If you stop screening new hires now and Congress reinstates it in six months, every employee hired between January 2026 and the reinstatement date who would have qualified is a lost credit forever. You cannot go back and file Form 8850 retroactively after the reinstatement announcement.
WOTC is a federal tax credit for hiring employees who belong to one of ten target groups the government has identified as facing barriers to employment. Those groups include SNAP recipients, veterans, formerly incarcerated individuals, people referred from vocational rehabilitation programs, and individuals who have been long term unemployed. Retail and food service employers have some of the highest qualifying new hire rates in any industry because their labor pools overlap heavily with these groups.
The credit is worth 40% of the first $6,000 in first year wages for employees who work 400 or more hours, for a maximum of $2,400 per employee. For certain categories of qualifying veterans, the maximum credit reaches $9,600. For a retailer hiring 50 new employees per year with a 25% qualification rate, that is approximately $30,000 in federal tax credits per year at the standard rate before any state level WOTC equivalents are counted.
How to Preserve Eligibility During the Legislative Gap
The 28 day deadline is the critical operational detail. To qualify for WOTC (or for the retroactive credit when it is reinstated), the Form 8850 must have been submitted to the SWA within 28 calendar days of the employee’s first day of work. That is a business process requirement that does not care about the legislative gap. If you stop filing the forms now and Congress reinstates WOTC, the employees hired during the gap will not qualify because the 28 day window will have passed.
State Workforce Agencies are currently issuing certifications with ‘pending’ status noting that reauthorization is needed. That is the correct process. Those pending certifications will convert to full certifications when Congress acts. The paperwork filed during the gap is not wasted it is the mechanism that preserves the credit opportunity.
Bottom Line: Do not shut down your WOTC screening process because the credit lapsed. The 28 day filing deadline does not pause during the legislative gap, and Congress has a consistent track record of reinstating WOTC retroactively. Keep screening, keep filing Form 8850 within 28 days of every new hire, and do not give up a credit that may come back in your favor.