The tax credit employers can claim depends on the target group of the individual hired, the wages paid to that individual in the first year of employment, and the number of hours that individual worked. There is also a maximum tax credit that can be earned.

  • If the individual works at least 120 hours, the employer may claim a tax credit equal to 25% of the individual’s first year wages, up to the maximum tax credit.
  • If the individual works at least 400 hours, the employer may claim a tax credit equal to 40% of the individual’s first year wages, up to the maximum tax credit.

Only for the Long-term Temporary Assistance for Needy Families (TANF) target group, the credit is available to employers who hire members of this group for a two-year period.

  • In the first year, employers may claim a tax credit equal to:

    • 25% of the first-year wages, up to the maximum tax credit, if the individual works at least 120 hours.
    • 40% of the first-year wages, up to the maximum tax credit, if the individual works at least 400 hours.
  • In the second year, employers may claim a tax credit equal to:

    • 25% of the second-year wages, up to the maximum tax credit, if the individual works at least 120 hours.
    • 50% of the second-year wages, up to the maximum tax credit, if the individual works at least 400 hours.
  • Veterans
  • TANF Recipients
  • SNAP (Food Stamp) Recipients
  • Designated Community Residents (living in Empowerment Zones or Rural Renewal Counties)
  • Vocational Rehabilitation Referral

  • Ex-felons
  • Supplemental Security Income Recipients
  • Summer Youth Employee (living in Empowerment Zones)
  • Individuals unemployed for 27 weeks
Employers generally can earn a tax credit equal to 25% or 40% of a new employee’s first-year wages, up to the maximum for the target group to which the employee belongs. Employers will earn 25% if the employee works at least 120 hours and 40% if the employee works at least 400 hours.
The maximum tax credit amounts depend on the new employee’s target group and the number of hours worked during the first year of employment.

Non-Veteran Target Group Maximum Tax Credit
Short-Term TANF Recipient $2,400
Long-Term TANF Recipient $9,000 (over 2 yrs)
SNAP (food stamp) Recipient $2,400
Designated Community Resident $2,400
Vocational Rehabilitation Referral $2,400
Ex-Felon $2,400
SSI Recipient $2,400
Summer Youth $1,200
Unemployed Individual $2,400
Veteran Target Group $2,400 – $9,600