FY 2025 WOTC incremental allotments, Change 1

CLASSIFICATION
   EMPLOYMENT AND TRAINING ADMINISTRATION               WOTC
               ADVISORY SYSTEM                          CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR                      OWI DNPTTA
                                                        DATE
             Washington, D.C. 20210
                                                        March 11, 2025

ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 08-24,
                CHANGE 1

TO:             STATE WORKFORCE AGENCIES
                STATE WORKFORCE ADMINISTRATORS
                WORK OPPORTUNITY TAX CREDIT COORDINATORS

FROM:           AMY SIMON
                Acting Assistant Secretary

SUBJECT:        Change 1 to Training and Employment Guidance Letter (TEGL) No. 08-24,
                Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal
                Year (FY) 2025

1. Purpose. To convey additional Fiscal Year (FY) 2025 Work Opportunity Tax Credit
   (WOTC) funding allotments and application requirements for State Workforce Agencies
   (SWA), based on funding appropriated through a second continuing resolution (CR#2)
   through March 14, 2025. The rest of Training and Employment Guidance Letter (TEGL)
   No. 08-24 remains the same.

2. Action Requested. Grantees must meet the application requirements detailed in section 4
   within 30 calendar days from the date of this TEGL issuance.

3. Summary and Background.
   a. Summary – On December 5, 2024, the Employment and Training Administration (ETA)
      issued TEGL No. 08-24, which announced the initial FY 2025 WOTC funding allotments
      of $4,101,822 under the American Relief Act, 2025, (Pub. L. 118-158, September 26,
      2024). Congress passed a second continuing resolution (CR#2) known as the American
      Relief Act, 2025, (Pub. L. 118-158, December 21, 2024). CR#2 provides for incremental
      FY 2025 grant funding for states’ administration of the WOTC, prorated based on the
      CR#2’s expiration date of March 14, 2025. The appropriation for WOTC under CR#2 is
      $4,253,398. Once Congress authorizes final appropriations for FY 2025 or additional
      incremental funding under a subsequent CR, ETA will publish a change to this TEGL to
      announce the full-year or incremental allotments and balances for states. If applicable,
      ETA will also announce any additional funding appropriated to reduce processing
      backlogs and assist states in adopting or modernizing information technology for
      processing of certification requests. ETA requests that SWAs submit applications for
      funding as allotted in Attachment I of this TEGL.

  RESCISSIONS                                            EXPIRATION DATE
  None                                                   Continuing

   b. Background – The WOTC is set forth under section 51 of the Internal Revenue Code of
      1986, as amended (26 U.S.C. § 51), and is authorized until December 31, 2025, under the
      Consolidated Appropriations Act, 2021 (Pub. L. 116-260), Division EE, Title I, Section
      113. The U.S. Department of the Treasury, through the Internal Revenue Service (IRS),
      administers all tax-related provisions and requirements of the tax credit. The U.S.
      Department of Labor, through ETA, awards grants to states to administer the WOTC.

4. Details. States must enter their state-specific allotment amount (provided in Attachment I)
   on their SF-424 Form, Application for Federal Assistance (OMB Control No. 4040-0004), as
   their request for incremental FY 2025 funding.

   Allotment Formula. While under a continuing resolution, ETA calculates incremental
   allotments to states based on the prior fiscal year’s allotment percentages. Specifically, ETA
   determined the FY 2025 CR #2 state allotment amounts (provided in Attachment I) for
   normal WOTC operations by calculating each state’s relative share of FY 2024 funding and
   multiplying each state’s relative share by the total FY 2025 WOTC CR# 2 prorated funding
   amount through March 14, 2025.

   Once Congress authorizes final appropriations for FY 2025, ETA will determine FY 2025
   state allotments for normal WOTC operations according to the following methodology:

   After allocating $36,000 to the U.S. Virgin Islands, ETA distributes the remaining funds to
   the SWAs by administrative formula with an estimated $94,957 minimum allotment and a 95
   percent stop-loss/120 percent stop-gain from the previous year allotment percentage. We
   calculate the administrative formula as follows:

   a. 40 percent based on each State’s relative share of certifications issued for the most
      recently completed fiscal year’s available data (October 1 through September 30);

   b. 40 percent based on each State’s relative share of the denials issued for the most recently
      completed fiscal year’s available data (October 1 through September 30); and

   c. 20 percent is based on each state’s relative share of Civilian Labor Force (CLF) averages
      for the 12-month period of the most recently completed fiscal year’s available data
      (October 1 through September 30).

   Application Requirements for FY 2025 Funding. ETA requires grantees to submit an
   electronically signed copy of the SF-424 Form, Application for Federal Assistance (OMB
   Control No. 4040-0004), as their official request for funding opportunity number ‘ETA-
   WOTC-TEGL-08-24, C1at https://www.grants.gov, within 30 calendar days from the
   issuance date of this TEGL. The official, electronically signed SF-424 Form should be
   marked as a ‘continuation’ application for funding and must reflect the amount listed in
   Attachment I as the state’s requested estimated funding total in item #18. Grantees must
   enter the Catalog of Federal Domestic Assistance Number ‘17.271’ for item #11 and the
   grantee’s 12-character Unique Entity Identifier (UEI) number for item #8c. Each applicant

must have a UEI number available, and it must be registered in the System for Award
Management (SAM.gov) before submitting an SF-424 application.

Grantees should indicate the estimated amount of Indirect Costs to be claimed by the
recipient for FY 2025 expenditures, if any, as a sentence for item #15, ‘Descriptive Title of
Applicant's Project.’ Grantees may use the amount of indirect costs reported against their FY
2024 WOTC grant as an approximate for FY 2025 indirect cost expenditures. For example:
“Indirect Costs for this award are estimated at $19,000.” If there is no estimated Indirect
Costs, the following statement must be entered: “Indirect Costs for this award are estimated
at $0.00.”

To submit the required documents, applicants must follow the “Apply for Grants” link on
Grants.gov and download the links for the grant application package. For this funding
opportunity, applicants may also follow the “Search Grants” link and enter ’ETA-WOTC-
TEGL-08-24’ in the Keyword(s) field to search for the formula funding opportunity. If
applicants encounter a problem with Grants.gov and do not find an answer in available
resources, they should call 1-800-518-4726 or 1-606-545-5035 to speak to a Customer
Support Representative, or send an email to [email protected].

Award Descriptions. As part of a Federal Government-wide effort to describe grant
activities consistently and accurately, ETA uses standard grant award descriptions. States
may see the following text in the grant award or in online descriptions of the WOTC grants:
    • Purpose: The purpose of this grant is to allow SWAs to administer WOTC per ETA
         guidance and provisions set forth in the IRS Code of 1986, Section 51, as amended.
         Law designates the SWAs as the only agencies that can issue a Certification (26
         U.S.C. § 51(d)(12)). The statute refers to SWAs as State employment security
         agencies, established in accordance with the Wagner-Peyser Act, 29 U.S.C. § 49 et
         seq.
    • Activities to be performed: SWAs must use funds to implement the requirements
         set forth in the WOTC Statement of Work, including to: Designate a state coordinator
         who oversees the administration of WOTC for each state grant; Determine eligibility
         of individuals as members of targeted groups on a timely basis, and issue employer
         certifications, denials, or notices of invalidation for tax credits on a timely basis, and
         in accordance with the policies and procedures set forth by ETA; and Establish and
         maintain appropriate forms’ quality review process, record keeping, and reporting
         capability related to the orderly management of WOTC certification requests.
    • Expected Outcomes: For WOTC grants, SWAs will issue determinations
         (certifications or denials) for employers’ certification requests, which facilitate tax
         credits determined by the U.S. Department of the Treasury. SWAs will increase
         efficiency in processing employers’ certification requests and develop plans that
         include an estimated timeline to eliminate existing backlogs of certification requests.
    • Intended Beneficiaries: Job seekers who have access to a higher number of
         employment opportunities, and employers who seek to increase hiring of qualified job
         applicants. Other beneficiaries include state and local partner agencies in the
         American Job Center network that coordinate efforts to promote WOTC to

           employers, job seekers, and other Workforce Innovation and Opportunity Act
           (WIOA) partners.
       •   Subrecipient Activities: SWAs, as WOTC grant recipients, do not typically
           subaward funds. States that wish to subaward funds should seek approval from their
           Grant Officer.

   General Administration. With their FY 2025 grant award, SWAs are responsible for
   conducting the WOTC activities outlined in the WOTC Statement of Work (See Attachment
   II of TEGL 08-24, available here: https://www.dol.gov/agencies/eta/advisories/tegl-08-24).
   As noted above, this TEGL provides incremental funding proportional to funds appropriated
   through the March 14, 2025 expiration date in CR#2; the timing and amount(s) of subsequent
   incremental funding depends on future appropriations.

   Reporting Requirements.
   a. Quarterly Financial Report – SWAs must report fiscal expenditures quarterly using
      ETA Form 9130. Financial reports are due no later than 45 days following the end of
      each quarter. Timely submission of these reports is important to ensure proper
      accounting of funds.
   b. Quarterly Performance Report – SWAs must use the web-based Enterprise Business
      Support System (EBSS) Tax Credit Reporting System to report quarterly activities and
      outcomes using ETA Form 9058. Performance reports are due no later than 45 days
      following the end of each quarter. Timely submission of these reports is important for
      administration purposes.

5. Inquiries. Please direct inquiries to the appropriate Regional WOTC Coordinator listed on
   the WOTC website at https://www.dol.gov/agencies/eta/wotc/contact/regional-offices.

6. References.
   • Section 51 of the Internal Revenue Code of 1986, as amended (26 U.S.C. § 51)
      (https://uscode.house.gov/view.xhtml?path=/prelim@title26/subtitleA/chapter1/subchapt
      erA/part4/subpartF&edition=prelim);
   •  Chapter 4B of Title 29 of the United States Code (Labor)
      (https://uscode.house.gov/view.xhtml?path=/prelim@title29/chapter4B&edition=prelim);
   •  Pub. L. 116-260, Consolidated Appropriations Act, 2021, which extended the
      authorization for WOTC (https://www.congress.gov/116/plaws/publ260/PLAW-
      116publ260.pdf);
   •  Pub. L. 118-47, Further Consolidated Appropriations Act, 2024
      (https://www.congress.gov/118/plaws/publ47/PLAW-118publ47.pdf);
   •  TEGL No. 06-23, Change 2, Change 2 to Training and Employment Guidance Letter No.
      06-23, Work Opportunity Tax Credit (WOTC) Initial Funding Allotments for Fiscal Year
      2024 (https://www.dol.gov/agencies/eta/advisories/tegl-06-23-change-2); and
   • Pub. L. 118-83, Continuing Appropriations and Extensions Act, 2025
      (https://www.congress.gov/118/plaws/).
   • Pub. L. 118-158, American Relief Act, 2025 (BILLS-118hr10545enr.pdf).

7. Attachment(s).
   •  Attachment I: Work Opportunity Tax Credit Fiscal Year 2025 CR 2 State Allotments

                                Work Opportunity Tax Credit          Attachment I
                       FY 2025 Funding under Continuing Resolution

State                       CR #2 12/21/24 thru 3/14/25 (23.01%)     Total
                                                                       $4,253,398

Alabama                                                                       65,540
Alaska                                                                        18,208
Arizona                                                                       75,209
Arkansas                                                                      35,682
California                                                                   538,022
Colorado                                                                      65,388
Connecticut                                                                   37,134
Delaware                                                                      22,338
District of Columbia                                                          18,208
Florida                                                                      217,563
Georgia                                                                      111,308
Hawaii                                                                        23,011
Idaho                                                                         20,621
Illinois                                                                     159,574
Indiana                                                                       59,679
Iowa                                                                          47,782
Kansas                                                                        32,085
Kentucky                                                                      77,283
Louisiana                                                                     67,839
Maine                                                                         18,208
Maryland                                                                      87,080
Massachusetts                                                                 83,104
Michigan                                                                     125,502
Minnesota                                                                     62,904
Mississippi                                                                   45,295
Missouri                                                                      82,693
Montana                                                                       18,208
Nebraska                                                                      29,129
Nevada                                                                        37,452
New Hampshire                                                                 18,208
New Jersey                                                                    81,598
New Mexico                                                                    37,102
New York                                                                     273,808
North Carolina                                                               120,140
North Dakota                                                                  18,208
Ohio                                                                         189,910
Oklahoma                                                                      56,855
Oregon                                                                        56,887
Pennsylvania                                                                 155,201
Puerto Rico                                                                   22,490
Rhode Island                                                                  19,719
South Carolina                                                                61,539
South Dakota                                                                  18,208
Tennessee                                                                    142,785
Texas                                                                        346,978
Utah                                                                          27,382
Vermont                                                                       18,208
Virginia                                                                      90,420
Washington                                                                    90,838
West Virginia                                                                 27,382
Wisconsin                                                                     70,991
Wyoming                                                                       18,208
Virgin Islands                                                                 8,284