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Work related credits, other tax incentives extended

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February 2020


Legislation enacted last December (the Act) included extensions of more than 30 expired or expiring tax provisions (commonly referred to as ‘tax extenders’), including several provisions of importance to employers.  In particular, the Act extends the Employee Retention Tax Credit, equal to 40% of up to $6,000 of qualified wages paid to eligible employees by eligible employers with interrupted business operations caused by certain major disasters that occurred during 2018 and 2019. Notably, the Act broadens the scope of disaster zones that may be eligible for the credit. 

In addition, the Act extended, generally through December 31, 2020, other tax incentives related to employers, namely, the Work Opportunity Tax Credit (WOTC) and the Empowerment Zone work credit.  The numerous extensions in the Act also included the New Markets Tax Credit (NMTC) and the alternative fuel excise tax credit.

The takeaway

The Act extends the Employee Retention Tax Credit to taxpayers that were affected by qualified disasters in years 2018 and 2019. Employers have an opportunity to recover expenses associated with wages paid to employees for certain periods during which their businesses were inoperable as a result of qualified disasters. 

As noted, the Act also extended other federal tax incentives, including the Work Opportunity Tax Credit, the Empowerment Zone Credit, the New Markets Tax Credit, and the alternative fuel excise tax credit. Companies and organizations should determine the availability of these benefits for their business activities and hiring practices.

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Peter Michalowski

State and Local Tax Leader, PwC US

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