Capitol Insights: WOTC outlook amid shifting legislative timelines
Capitol Insights offers an overview of federal policy developments relevant to employers navigating tax credits, workforce incentives, and compliance considerations. Each update highlights legislative activity that may influence the Work Opportunity Tax Credit and related employment programs.
Latest update
In the latest Capitol Insights, congressional negotiations centered on avoiding a lapse in federal funding ahead of the January 31 deadline, with healthcare policy and tax provisions closely tied to appropriations discussions. These dynamics reinforced the likelihood that the Work Opportunity Tax Credit would advance as part of a broader omnibus legislative package rather than as a standalone measure. Read Week 13 here .
At a glance:
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DHS funding negotiations remain unresolved, affecting the timing of related tax legislation.
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WOTC’s path forward depends on identifying a legislative vehicle that includes a tax title.
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Lawmakers continue work on market structure bills addressing cryptocurrency and digital asset taxation.
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Budget reconciliation remains under discussion as a possible path for tax extenders.
Congressional leaders set a deadline of Friday, February 13, to reach agreement on a funding plan for the Department of Homeland Security (DHS). The proposal was expected to include a combination of previously raised policy priorities from both parties. As of this week, negotiations have shown limited progress.
With both the House and Senate scheduled to be out of session next week, the likelihood of a technical DHS funding lapse has increased. While most DHS personnel would be designated as essential and operations would continue, the uncertainty surrounding the funding package affects a broader set of legislative considerations, including the timing of tax-related provisions such as the Work Opportunity Tax Credit (WOTC).
DHS funding uncertainty and implications for tax provisions
Recent engagement on Capitol Hill continues to reflect steady support for WOTC among members of the tax writing committees and congressional leadership. Lawmakers across parties continue to view the credit as a workforce policy that supports employer hiring while expanding access to employment for individuals facing barriers to work.
From a legislative standpoint, the issue facing WOTC is tied to timing and process. Any extension or modification of the program requires inclusion in legislation that contains a tax title, and the status of DHS funding continues to shape the timing of that pathway.
Ongoing consideration of alternative tax legislation
In parallel with DHS discussions, tax writing committees are advancing work on legislation addressing the taxation of cryptocurrencies, digital assets, and other emerging financial instruments. These issues remain an area of focus due to the absence of clearly defined statutory guidance and the continued growth of the market.
Budget reconciliation discussions continue
Close margins in both chambers continue to influence legislative strategy. In the Senate, the margin stands at 53–47, while the House margin remains narrow (currently 218–216). Even with these constraints, discussions are underway regarding the potential use of a second budget reconciliation bill this spring, with a focus on affordability and economic concerns ahead of the November midterm elections.
The House Republican Study Committee recently released a reconciliation framework titled “Making the American Dream Affordable Again,” which includes a call for extending WOTC. Supporters of reconciliation have noted that prior Congresses have successfully enacted multiple reconciliation measures despite similarly narrow margins.
Any reconciliation effort would be expected to include a tax title with a combination of new provisions and tax extenders, keeping WOTC within the scope of consideration.
Healthcare negotiations remain unresolved
Separate from tax discussions, negotiations related to healthcare policy continue to present challenges. Democratic leaders have emphasized the importance of extending enhanced Affordable Care Act premium subsidies as part of any bipartisan agreement. To date, these negotiations have not resulted in a resolution.
A reconciliation-focused approach could include certain healthcare provisions, though it would likely differ in scope from proposals currently under discussion in bipartisan talks.
Outlook for WOTC
Across these legislative scenarios, WOTC continues to be viewed as a stable and well-understood workforce program. Members of Congress have consistently expressed support for its role in encouraging hiring while promoting opportunity for individuals and communities.
The path forward remains dependent on broader legislative timing and the availability of a suitable vehicle that includes tax provisions. As Congress works through funding decisions, emerging tax priorities, and election-year dynamics, WOTC remains positioned for inclusion when a viable tax package advances.
As legislative timing continues to evolve, employers are encouraged to maintain existing WOTC screening and certification processes. Continuing to identify eligible hires and file certifications helps preserve potential credits and ensures readiness when legislative activity resumes. Employers with questions about current eligibility, documentation, or program status are encouraged to reach out to the Maximus team for guidance.
