Quick answer: The federal Work Opportunity Tax Credit California employers have used for years expired on December 31, 2025, and as of October 2026 we could not find any law that renews it. California's EDD is still accepting WOTC applications for 2026 hires and holding them "pending federal reauthorization." So keep filing Form 8850 and ETA Form 9061 within 28 days of each start date, but don't count on the credit. Meanwhile, Inland Empire employers can still use OJT reimbursement, ETP funds and county work-experience programs.
What Happened to the Work Opportunity Tax Credit in California?
WOTC is a federal credit. California's role is to certify that a new hire belongs to a target group.
The last extension came in the Consolidated Appropriations Act, 2021. The U.S. Department of Labor's WOTC page still says, "WOTC is authorized until December 31, 2025." The IRS WOTC page, last reviewed in July 2026, still says the credit covers people who "begin work on or before December 31, 2025."
California's Employment Development Department (EDD) is direct about it. Its WOTC FAQ says, "Federal authorization for the Work Opportunity Tax Credit (WOTC) expired on December 31, 2025." It adds that applications for people who started on or after January 1, 2026 are being accepted and kept pending reauthorization.
Bills to bring WOTC back have been introduced. In November 2025, Rep. Lloyd Smucker announced an updated Improve and Enhance the WOTC Act. It would extend the credit five years and raise the rate to 50%. But as of this writing, no reauthorization has been signed into law. Check irs.gov before you plan around the credit.
How WOTC Worked (and Would Work Again if Renewed)
If Congress renews WOTC, expect the old rules to be the starting point:
- Ten target groups. These include qualified veterans, people who were formerly incarcerated, SNAP recipients ages 18 to under 40, TANF and long-term family assistance recipients, SSI recipients, vocational rehabilitation referrals, people unemployed long term, and some youth and residents of designated zones (IRS).
- Credit size. The credit is generally 40% of up to $6,000 in first-year wages, a $2,400 maximum, for workers who put in at least 400 hours. A 25% rate applies at 120 to 399 hours. Some veteran categories qualify for much more. EDD describes the top amount as "up to $9,600."
- The 28-day rule. You and the applicant complete IRS Form 8850 on or before the day of the job offer. You then submit Form 8850 and ETA Form 9061 to the state within 28 calendar days of the start date. (DOL TEGL 16-20, Change 1).
- California processing. California employers file through EDD's online eWOTC system or by mail to the WOTC Authorization Center in Sacramento. EDD says online filing is faster. Employers with 25 or more employees must sign up for Employer Services Online first.
- Nonprofits. Tax-exempt employers can claim WOTC only against payroll taxes, and only for qualified veterans, using Form 5884-C.
Should Inland Empire Employers Keep Filing for the Work Opportunity Tax Credit in California?
For most employers, yes. Accounting firms such as CLA and state workforce agencies are giving the same advice. Congress has let WOTC lapse before and then renewed it retroactively more than once. If that happens again, the employers who filed on time are the ones who can claim it.
Filing costs little once screening is part of onboarding, whether you run a Fontana distribution center or a Barstow business that hires veterans from Fort Irwin. Just don't build a budget, a wage offer or a hiring plan on a credit that does not exist yet.
Hiring Incentives California Employers Can Still Use
These programs don't depend on WOTC. Eligibility and funding vary.
- On-the-job training (OJT) reimbursement. The San Bernardino County Workforce Development Department says OJT funds can reimburse up to 50% of a new hire's wages for up to three months of initial training. Our guide to on-the-job training reimbursement in California explains the steps.
- Employment Training Panel (ETP). ETP is California's own training fund, paid for by employers through payroll taxes. It can cover part of the cost of training current workers. See ETP training funding for California employers.
- County customized and incumbent worker training. The county's business services page says employers may "save up to 50 percent" on customized training for their teams.
- Transitional jobs and work experience. The county's Transitional Jobs flyer says it "fully covers wages for extra help positions," up to 320 hours per participant.
- California Competes Tax Credit. County business services staff can explain this state credit and other state hiring credits.
Call the county's Business Services Team at (800) 451-JOBS to check current funding.
How The Ayangbah Foundation Helps Employers
We are a 501(c)(3) nonprofit in downtown San Bernardino, where 18.6% of residents live in poverty and 13.1% of adults hold a bachelor's degree (U.S. Census QuickFacts). Many people WOTC was meant to help live here.
- Job-ready candidates. Our 40-hour Career Readiness & Entrepreneurship Employment Training certificate covers resumes, interviews and workplace habits.
- Second-chance talent. We prepare reentry participants for interviews and the workplace.
- Short skills courses for your team. Microsoft Excel & Office Essentials and QuickBooks Bookkeeping Essentials (12 hours each), plus a Public Speaking & Communication Lab.
- Work experience. We are an approved work-experience worksite with the San Bernardino County Workforce Development Department, and we have hosted and mentored 10 interns.
Every class runs in person and live online, with day, evening and Saturday options. See all employer solutions.
How to Partner With Us
Tell us who you're hiring. We'll prepare candidates, train your staff, or point you to county programs that may help with costs. Send us a partnership request or call (909) 454-7076.
FAQ
Is the Work Opportunity Tax Credit still available in 2026?
Not yet. WOTC expired on December 31, 2025, and as of October 2026 no reauthorization has become law. California's EDD is accepting 2026 applications and holding them pending federal action.
Should I still file Form 8850 for new hires in California?
Yes, if you want to keep the option open. Submit Form 8850 and ETA Form 9061 within 28 calendar days of the start date.
How much was the WOTC worth per employee?
Generally up to $2,400 per eligible hire who works at least 400 hours. Some veteran hires qualified for up to $9,600.
What hiring incentives can California employers use instead of WOTC?
Options include OJT wage reimbursement through local workforce boards, ETP training funds, county customized training and transitional-jobs programs, and the California Competes Tax Credit. Eligibility and funding vary.
Can a nonprofit claim the Work Opportunity Tax Credit?
Only in a limited way. Tax-exempt employers could claim WOTC against payroll taxes for qualified veterans, using IRS Form 5884-C.
Sources: IRS, "Work Opportunity Tax Credit" (irs.gov, last reviewed July 2026); U.S. Department of Labor ETA, "Work Opportunity Tax Credit" (dol.gov); California EDD, "WOTC FAQs" (edd.ca.gov); South Dakota Department of Labor & Regulation, WOTC Program Updates; CLA (CliftonLarsonAllen), "A Guide to WOTC and the Current Hiatus" (Feb. 2026); Office of Rep. Lloyd Smucker, press release, Nov. 21, 2025; San Bernardino County Workforce Development Department, Business Services page and Transitional Jobs flyer; U.S. Census Bureau QuickFacts, San Bernardino city.