The Small Business and Work Opportunity Tax Act of 2007

Great news! The Small Business and Work Opportunity Tax Act of 2007, which was signed into law on May 25th, has several very beneficial provisions for businesses. The changes will all take place beginning January 1st, 2008. The Work Opportunity Tax Credit (WOTC) is now extended through September 30, 2011. The law also expands the WOTC to allow credit to employers who hire veterans and individuals in counties that have suffered population loss. Another expansion involves the definition of high-risk youths from Enterprise Communities and Empowerment zones to include individuals age 18 but not yet age 40 on the hiring date.

The new legislation will also allow WOTC and the tip credit to be taken under the Alternative Minimum Tax (AMT). In addition, the tip credit will continue to be based on a minimum wage of $5.15 per hour rather than the new minimum wage, which will reach $7.25 over the next two years. This will allow employers to receive full tip credit despite an increase in the Federal minimum wage.