S. 3265

119 S3265 IS: Improve and Enhance the Work Opportunity Tax Credit Act
 U.S. Senate
 2025-11-20
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 Pursuant to Title 17 Section 105 of the United States Code, this file is not subject to copyright protection and is in the public domain.
 II  119th CONGRESS  1st Session  S. 3265  IN THE SENATE OF THE UNITED STATES   November 20, 2025   Mr. Cassidy  (for himself,  Ms. Hassan ,  Mr. Boozman ,  Mr. Kaine ,  Mr. Marshall ,  Mr. Welch ,  Mr. Moran ,  Mr. Justice , and  Ms. Cortez Masto ) introduced the following bill; which was read twice and referred to the  Committee on Finance    A BILL
To amend the Internal Revenue Code of 1986 to improve and enhance the work opportunity tax credit, to encourage longer-service employment, and to modernize the credit to make it more effective as a hiring incentive for targeted workers, and for other purposes.
1.
Short title
This Act may be cited as the   Improve and Enhance the Work Opportunity Tax Credit Act  .
2.
Improving and enhancing work opportunity tax credit
(a)
Extension
 Section 51(c)(4)  of the Internal Revenue Code of 1986 is amended by striking  December 31, 2025  and inserting  December 31, 2030 .
(b)
Enhancement of credit
(1)
In general
 Section 51(a)  of the Internal Revenue Code of 1986 is amended—
(A)
by striking  shall be equal to 40 percent  and all that follows and inserting the following:
shall be equal to the sum of—
(1)
50 percent of so much of the qualified first-year wages with respect to each individual for such year as does not exceed $6,000, plus
(2)
in the case of individuals who have performed at least 400 hours of service for the employer, 50 percent of so much of the qualified first-year wages with respect to each such individual for such year as exceeds the dollar amount in effect under paragraph (1) and does not exceed twice such dollar amount.
 .
(2)
Inflation adjustments
Section 51 of such Code is amended by adding at the end the following new subsection:
(l)
Inflation adjustment
(1)
In general
In the case of any taxable year beginning after 2025, the $6,000 amount in subsections (a)(1) and each of the $10,000 amount in subsection (e)(1) shall be increased by an amount equal to—
(A)
such dollar amount, multiplied by
(B)
the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting  calendar year 2024  for  calendar year 2016  in subparagraph (A)(ii) thereof.
(2)
Rounding
Any increase determined under paragraph (1) shall be rounded to the next nearest multiple of $100.
 .
(3)
Conforming amendments
(A)
Limitation on wages taken into account for certain veterans
Section 51(b)(3) of such Code is amended to read as follows:
(3)
Increased limitation on wages taken into account for certain veterans
(A)
In general
In the case of any qualified veteran described in subparagraph (B), subsection (a) shall be applied by substituting  the applicable amount  for  $6,000 .
(B)
Applicable amount
For purposes of this paragraph, the applicable amount is—
(i)
in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(I), 200 percent of the dollar amount in effect under subsection (a)(1),
(ii)
in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(iv), 250 percent of the dollar amount in effect under subsection (a)(1), and
(iii)
in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(II), 400 percent of the dollar amount in effect under subsection (a)(1).
 .
(B)
Long-term family assistance recipients
(i)
In general
Section 51(e)(1) of such Code is amended by striking  family assistance recipient—  and all that follows and inserting the following:
family assistance recipient, in lieu of subsection (a), the amount of the work opportunity credit determined under this section for the taxable year shall be equal to—
(1)
40 percent of so much of the qualified first-year wages with respect to such individual for such year as does not exceed $10,000, and
(2)
50 percent of so much of the qualified second-year wages with respect to such individual for such year as does not exceed $10,000.
 .
(ii)
Clerical amendment
The heading for section 51(e) of such Code is amended by striking
Credit for second-year wages   and inserting
Special rules for determining credit  .
(C)
Summer youth employees
Section 51(d)(7)(B) of such Code is amended—
(i)
by striking clause (ii),
(ii)
by striking  , and  at the end of clause (i) and inserting a period,
(iii)
by redesignating clause (i) (as so amended) as clause (v), and
(iv)
by inserting before such clause (v) (as so redesignated) the following new clauses:
(i)
in lieu of the amount determined under subsection (a), the amount of the work opportunity credit determined under this section for the taxable year shall be equal to 40 percent of the qualified first-year wages for such year,
(ii)
in the case of an individual described in subsection (i)(3)(A), clause (i) shall be applied by substituting  25 percent  for  40 percent ,
(iii)
in the case of an individual described in subsection (i)(3)(B), no wages shall be taken into account under clause (i),
(iv)
the amount of qualified first-year wages which may be taken into account with respect to such individual shall not exceed 50 percent of the dollar amount in effect under subsection (a)(1), and
 .
(D)
Agricultural and railway labor
(i)
In general
Section 51(h)(1) of such Code is amended—
(I)
in subparagraph (A), by striking  $6,000  and inserting  the dollar amount in effect under subsection (a)(1) , and
(II)
in subparagraph (B), by striking  $500 per month  and inserting  one-twelfth of the dollar amount in effect under subsection (a)(1) per month .
(ii)
Related conforming amendments
Section 51(e)(3) of such Code is amended by striking subparagraphs (A) and (B) and inserting the following:
(A)
such subparagraph (A) shall be applied by substituting  the dollar amount in effect under subsection (e)(1)  for  the dollar amount in effect under subsection (a)(1) , and
(B)
such subparagraph (B) shall be applied by substituting  one-twelfth of the dollar amount in effect under subsection(e)(1)  for  one-twelfth of the dollar amount in effect under subsection (a)(1) .
 .
(E)
Individuals not meeting minimum employment periods
(i)
Subparagraphs (A) and (B) of section 51(i)(3) of such Code are each amended by striking  subsection (a)  and inserting  subsection (a)(1) .
(ii)
Section 51(i)(3)(A) of such Code is amended by striking  40 percent  and inserting  50 percent .
(c)
Removal of age limit for qualified supplemental nutrition assistance program benefits recipient
Section 51(d)(8)(A)(i) of such Code is amended by striking  but not age 40 .
(d)
Effective date
The amendments made by this section shall apply to individuals who begin work for the employer after December 31, 2025.
3.
Eligibility of spouses of military personnel for the work opportunity credit
(a)
In general
Paragraph (1) of  section 51(d)  of the Internal Revenue Code of 1986 is amended by striking  or  at the end of subparagraph (I), by striking the period at the end of subparagraph (J) and inserting  , or , and by adding at the end the following new subparagraph:
(K)
a qualified military spouse.
 .
(b)
Qualified military spouse
Subsection (d) of section 51 of such Code is amended by adding at the end the following new paragraph:
(16)
Qualified military spouse
The term  qualified military spouse  means any individual who is certified by the designated local agency as being (as of the hiring date) a spouse of a member of the Armed Forces of the United States.
 .
(c)
Effective date
The amendments made by this section shall apply to amounts paid or incurred after the date of the enactment of this Act to individuals who begin work for the employer after such date.
4.
Promotion of targeted group member hiring to certain industries
The Secretary of the Treasury, the Secretary of Commerce, the Secretary of Labor, and the Administrator of the Small Business Administration (or their respective delegates), in consultation with each other and consistent with applicable law, shall promote the hiring of members of a targeted group (as defined in  section 51(d)  of the Internal Revenue Code of 1986) to business leaders across critical industry sectors, including manufacturing, infrastructure, energy, health care, and construction.