Legislative Spotlight: Improve and Enhance the Work Opportunity Tax Credit Act (H.R. 6231 / S. 3265)

Our clients face an uphill battle when trying to navigate the complex landscape of returning to the workforce. This month, we spotlight companion bills pending in both chambers of Congress: H.R. 6231 and S. 3265, the “Improve and Enhance the Work Opportunity Tax Credit Act.”

NOSSCR has a long history of supporting initiatives that provide pathways for claimants who attempt to re-enter the workforce. This legislation would enhance the financial incentive for businesses to hire individuals from vulnerable populations. For our clients navigating the rigid limits of Substantial Gainful Activity or managing the stringent resource rules of SSI, federal hiring incentives can make a difference in securing an accommodating employer.

How We Got Here

This effort began in February 2025, when Representative Lloyd Smucker (R-PA-11) and Senator Bill Cassidy (R-LA) introduced the original companion bills, H.R. 1177 and S. 492. Those measures attracted genuine bipartisan support—H.R. 1177 drew 16 cosponsors from both parties, and S. 492 was cosponsored by Senators Maggie Hassan (D-NH) and Christopher Coons (D-DE). But the bills faced a structural problem: the WOTC itself was authorized only for employees hired through December 31, 2025, and the original legislation enhanced the credit without extending it. When the hiring deadline passed at the end of last year, the credit lapsed for new hires.

The sponsors addressed this on November 20, 2025, by introducing updated versions—H.R. 6231 and S. 3265—that pair the same enhancements with a five-year extension of the credit itself. These are now the operative vehicles, and the lapse has transformed the debate: what began as a modernization effort is now also a restoration effort, giving the legislation a natural urgency and a plausible path onto any tax package Congress assembles.

Key Technical Updates

The legislation amends the Internal Revenue Code to restore, modernize, and expand the Work Opportunity Tax Credit (WOTC—a federal tax credit available to employers for hiring individuals from certain targeted groups):

• Restoring and Extending the Credit: The bills extend the WOTC’s hiring deadline from December 31, 2025 to December 31, 2030, reauthorizing a credit that lapsed for new hires at the end of last year and giving employers five years of planning certainty.
• Boosting the First-Year Credit: The legislation increases the WOTC rate from 40% to 50% for qualified first-year wages up to $6,000, significantly increasing the immediate financial benefit to hiring businesses.
• Encouraging Retention: For employees who perform at least 400 hours of service, the bill adds an additional credit tier of 50% for qualified first-year wages between $6,000 and $12,000.
• Expanding Access for Older Workers: Under the credit as it existed before the lapse, employers could claim the SNAP (Supplemental Nutrition Assistance Program—a federal nutrition assistance program) category only for recipients who were adults under the age of 40. The bill strikes this restrictive age cap, allowing employers to claim the credit for older SNAP recipients who often face compounded hiring discrimination.
• Proportional Adjustments for Targeted Groups: The bill proportionally doubles the enhanced wage caps for qualified veterans (up to $24,000/$48,000 for the most severely service-disabled category), while preserving current-law treatment for summer youth employees (40% of up to $3,000) and long-term family assistance recipients (40% of first-year wages plus the existing 50% second-year credit, each up to $10,000).

Bipartisan Traction

The updated bills launched with bipartisan coalitions in both chambers. In the House, Representative Smucker introduced H.R. 6231 with seven original cosponsors drawn from both parties, including Ways and Means members Mike Kelly (R-PA), Steven Horsford (D-NV), Don Beyer (D-VA), David Kustoff (R-TN), Blake Moore (R-UT), Max Miller (R-OH), and Suzan DelBene (D-WA). On the Senate side, Senator Cassidy introduced S. 3265 with eight original cosponsors split evenly across the aisle: Republicans John Boozman (AR), Roger Marshall (KS), Jerry Moran (KS), and Jim Justice (WV), and Democrats Maggie Hassan (NH), Tim Kaine (VA), Peter Welch (VT), and Catherine Cortez Masto (NV).

Looking Ahead

Both bills are awaiting review within their respective committees—the House Committee on Ways and Means and the Senate Committee on Finance. With the credit now lapsed, WOTC restoration joins the queue of expired tax provisions competing for a spot on the next tax vehicle, and the payroll and employer communities have been pressing the tax-writing committees to act. We will continue monitoring for committee activity and any opportunity to attach the extension to a moving package.

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