Office for People With Developmental Disabilities

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Financial Incentives and Tax Credits for Businesses that Employ People with Disabilities

02/02/17

Although most employers do not consider financial incentives and tax credits as their main reason for hiring individuals with disabilities, employers that do business in New York State and hire individuals who have a disability can trim their labor costs through several workforce and economic development programs. Employment-based tax credits may save your business money by cutting federal or state tax liability.

Work Opportunity Tax Credit

The Work Opportunity Tax Credit (WOTC) is a federal tax credit that benefits businesses that hire and retain workers with various barriers to employment.

Who May Be Eligible? Firms that hire workers who have received Social Security Income (SSI) benefits within 60 days prior to being hired, or who are referred to the firm by a vocational rehabilitation (VR) agency.

How It Works: Administered by the U.S. Department of Labor’s Employment and Training Administration (ETA), the WOTC provides support to employers by reimbursing a percentage of a worker’s wages for up to two years. The maximum amount of reimbursement varies based on the background of the individual hired.

Highlights: For workers hired under this program, firms are eligible for a 25 percent reimbursement of first-year wages once the employee has worked 120 hours; workers who work 400 hours result in a 40 percent reimbursement. The maximum reimbursement possible per worker in this category is $2,400.

The New York State Office for People With Developmental Disabilities (OPWDD), ACESS-VR, New York Commission for the Blind, or local agencies that participate in OPWDD’s Supported Employment Program (SEMP) can help identify potential employees meeting WOTC tax credit criteria and may be able to provide additional support, such as case management and accommodation coaching, through the Social Security Administration’s Ticket to Work Program.

NYS Workers Employment Tax Credit (WETC)

Businesses that employ people with disabilities who currently receive vocational rehabilitation services (or people who received them up to two years prior to hire) may earn $2,100 more in state tax credits. You get the credit during the second year of employment and can combine it with the WOTC credit.

NYS Workers with Disabilities Tax Credit (WDTC)

For-profit businesses and organizations that hire individuals with developmental disabilities may earn up to $5,000 for full-time employment (30 hours or more per week), and up to $2,500 for part-time employment (between 8 hours and 30 hours per week) in state tax credit. The period of employment must be no less than six months. If the amount of the credit exceeds the entity’s tax liability, then the tax credit may be carried over for the following three years. Note: Businesses cannot claim this tax credit for an individual they hire if they are already claiming another tax credit for that individual.

Disabled Access Tax Credit

Businesses with fewer than 30 employees and no more than $1 million in gross receipts in the preceding year can receive a tax credit of up to 50% of “eligible access expenditures”—eligible expenses include the removal of barriers —architectural, communication, or transportation—including modification of equipment and the use of interpreters, taped text, or alternative format for communication.  A small business is eligible for a 50 percent tax credit on expenditures between $250 and $10,250, with a maximum credit of $5,000 per year.  This credit can be “carried backward” up to three years and forwarded up to 15 years to subsidize larger expenditures at up to $5,000 per year.   Visit the IRS website for more information about tax benefits.

Barrier Removal Tax Deduction

Businesses of any size can take an annual deduction of up to $15,000 for expenses related to removing physical, structural and transportation barriers for people with disabilities

The ACCES-VR Business Relations Team in your area will facilitate the completion of all tax credit request forms.

Additional information is available at the IRS website or at www.acces.nysed.gov/common/acces/files/vr/wto.pdf

Work Try-Out (WTO)

WTO can offset many of the costs associated with hiring new employees, and also assures the employer that the employee is right for the job. ACCES-VR and NYSCB can reimburse a business for 100% of an employee's wages for up to 480 hours. This offers the business the opportunity to evaluate the employee's ability to satisfactorily perform the job. This wage reimbursement program requires the business to place the new hire on the company payroll and cover them with all benefits including Worker's Compensation and Social Security. Reimbursement occurs whether the employment outcome is successful or not. The try out period length is determined jointly by the employer and the ACCES-VR or NYSCB representative. The ACCES-VR WTO reimbursement breakout is calculated on an hourly basis with a maximum of 480 hours reimbursed at 100% gross wage.

On-the-Job Training (OJT)

ACCES-VR and NYSCB can reimburse a business for the wages paid during the training of a new employee when:

  1. The trainee requires specific skills training and supervision.
  2. The trainee is placed on the company’s payroll and covered with all benefits including Worker's Compensation and Social Security during the agreed upon training period covering the usual company benefits.
  3. The business agrees to retain the trainee upon completion of the training period.

The counselor and the employer will agree upon the length of the training period appropriate to the job. Upon the final retention of the trainee, the business will be eligible for all applicable tax credits.

In addition, there are a few on-the-job training opportunities designed to specifically assist people with developmental disabilities:

Employment Specialist Services- OPWDD funds over 200 supported employment agencies that provide employment services to people with developmental disabilities.  Employment services include the identification of employable interest, skills and abilities; job readiness services and employer services.  Once a person is hired, the supported employment agency provides individualized job training and coaching to assist the individual in meeting business expectations.  Supported employment agencies maintain ongoing contact as needed with both the business and employee should the need arise for additional training or other supports to help the employee successfully maintain their job.

Employment Training Program (ETP) - ETP is a statewide service funded by OPWDD that provides a wage subsidy for people with developmental disabilities who work for local businesses.  Participants in ETP are assessed for their interest, abilities and skills, and then are matched with a business that has similar employment needs.  While the worker is in training, OPWDD pays their wages until business standards are met and the person is officially hired, generally within one year.

Sources:  (New York State Employment and Workforce Solutions, Employer Assistance and Resource Network on Disability Inclusion (askEarn.org), ACCES-VR)