Businesses can take advantage of a variety of tax credits and other incentives by hiring new employees. There are two major tax credits that employers can receive in hiring people who have been unemployed: the Kentucky Unemployment Tax Credit (KUTC) and the Work Opportunity Tax Credit (WOTC). Each is explained below.
1. Kentucky Unemployment Tax Credit
The KUTC program provides employers a credit of $100 per eligible hire against Kentucky income taxes owed when they hire residents who have been unemployed for 60 days and remain on the payroll for at least 180 days.
The KUTC regulations and application form can be found here: KUTC Program
2. Work Opportunity Tax Credit
WOTC is a federal tax credit awarded to Kentucky companies that hire individuals who have consistently faced significant barriers to employment. The Kentucky Career Center Tax Credit Unit coordinates the USDOL-ETA WOTC program, which provides employers financial incentives when hiring workers from targeted groups of job seekers by reducing an employer’s federal income tax liability. Employers may receive WOTC certification between $1,200 and $9,600, depending on the target group, by hiring and retaining from the following specified WOTC target groups with an eligibility fact sheet linked below.
Qualified Long-term Temporary Assistance for Needy Families Recipient
Qualified Short-term Temporary Assistance for Needy Families Recipient
Qualified SNAP Food Stamp Recipient
Qualified Designated Community Resident
Qualified Vocational Rehabilitation Referral
Qualified Summer Youth Employee
Qualified Long-term Unemployment Recipient
Qualified Social Security Income Recipients
WOTC application process
The application process involves five steps with little paperwork involved. See Kentucky’s Employer Guide on how to apply for a Work Opportunity Tax Credit.
WOTC video resources
Watch these videos to learn more about the WOTC program.
Work Opportunity Tax Credit introduction
Work Opportunity Tax Credit: A Tutorial for Employers that includes details on what workers are eligible, other program requirements and a step-by-step guide on how to apply for the tax credit.
Work Opportunity Tax Credit for Veterans This video explains how WOTC can increase employment opportunities for veterans to the benefit of both veterans and employers.
For more information on either tax credit or to submit requests for certification, please contact:
Tax Credit Unit
Help Desk Phone: 502-782-3465
Help Desk Fax: 502-564-7459
Work Opportunity Tax Credit: WOTC@ky.gov
Tax Credit Unit mailing address
KCC Tax Credit Unit
500 Mero Street
Frankfort, KY 40621
WOTC Online System