FY 2025 WOTC remaining allotments and backlog awards, Change 2

EMPLOYMENT AND TRAINING ADMINISTRATION                CLASSIFICATION
               ADVISORY SYSTEM                           WOTC
                                                         CORRESPONDENCE SYMBOL
          U.S. DEPARTMENT OF LABOR
                                                         OWI DNPTTA
             Washington, D.C. 20210                      DATE
                                                         June 5, 2025

ADVISORY:       TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 08-24,
                CHANGE 2

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

FROM:           LORI FRAZIER BEARDEN
                Acting Assistant Secretary

SUBJECT:        Change 2 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 the remaining Fiscal Year (FY) 2025 Work Opportunity Tax Credit
   (WOTC) funding allotments and explain application requirements for State Workforce
   Agencies (SWA), based on appropriated funding. Furthermore, this Change 2 TEGL
   announces 29 states selected to receive additional FY 2025 backlog award funding and
   provides instructions to those states on how to proceed. 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 Continuing Appropriations and Extensions Act, 2025 (Pub. L.
      118-83, 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
      provided for incremental FY 2025 grant funding for states’ administration of the WOTC,
      prorated based on CR#2’s expiration date of March 14, 2025. The appropriation for
      WOTC under CR#2 was $4,253,398. On March 15, 2025, the President signed the Full-
      Year Continuing Appropriations and Extensions Act, 2025 (Pub. L. 119-4, March 15,
      2025) into law, authorizing the full year FY 2025 appropriations. This Change 2 TEGL
      announces the full-year appropriation and availability of the remaining balance to the
      states in the amount of $10,129,780. The state allotment amounts are listed in Attachment
      I, “Work Opportunity Tax Credit Fiscal Year 2025 State Allotments and Balance after
      Dissemination to States under Continuing Resolutions 1 through 2.” 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. WOTC Allotment Formula and Application Instructions.

   Allotment Formula. While under a CR for FY 2025 appropriations, incremental allotments
   to states were based on the prior fiscal year’s formula and allotment percentage. ETA
   determined CR1 and CR2 WOTC state allotment amounts for FY 2025 by calculating each
   state’s relative share of full-year FY 2024 funding and multiplying each state’s relative share
   by the total FY 2025 CR prorated funding amounts, through December 20, 2024, and March
   14, 2025, respectively. Once Congress passed the full-year FY 2025 appropriation, ETA
   determined FY 2025 state allotments for normal WOTC operations (‘balance after
   dissemination to states under CR1 and CR2’), 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 a $94,957 minimum allotment and a 95 percent
   stop-loss/120 percent stop-gain from the previous year allotment percentage. ETA calculates
   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, 2023 through September 30,
      2024);

   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, 2023 through September 30, 2024);
      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, 2023 through September 30, 2024).

   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 within 30 calendar days from
   the issuance date of this TEGL at https://www.grants.gov.

   The official, electronically signed SF-424 Form should be marked as a ‘continuation’
   application for funding, and grantees must enter their state-specific allotment amount listed
   in Attachment I as the state’s requested estimated funding total in item #18 as their request
   for FY 2025 funding. States selected for FY 2025 WOTC Backlog Award funding must enter
   the state-specific award amount listed in Section 4 of this TEGL on a separate SF-424 Form.

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.

If grantees previously indicated the estimated amount of Indirect Costs to be claimed by the
recipient for FY 2025 expenditures under the SF-424 Form, submitted for the CR1 initial
funding distribution announced in TEGL No. 08-24, grantees should not resubmit this
information again in item #15, ‘Descriptive Title of Applicant’s Project,’ as part of this
SF424 application request for remaining balances funding.

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. For the
remaining balance funding, the opportunity number is ‘ETA-WOTC-TEGL-08-24-C2,’ and
for backlog awards funding, the opportunity number is ‘ETA-WOTC-TEGL-08-24-C2-
BACKLOG.’ 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].

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).

FY 2025 WOTC System Modernization Awards. ETA intends to distribute WOTC
System Modernization awards to 29 states with the most critical needs for adopting or
modernizing information technology for processing of certification requests, and/or
assistance in alleviating processing backlogs. To inform the selection process, ETA analyzed
the following data:
    a. FY 2024 backlog total and percentage ratio it represents of the state’s total workload;
    and
    b. FY 2023 and FY 2024 financial reports.

ETA also asked all interested states to describe their intended uses of system modernization
awards, specifically how the states would use this award to make improvements to their
existing systems or procedures and reduce their backlog, and/or how states have used prior
backlog awards to make improvements to their systems/reduce processing backlog.

ETA analyzed FY 2023 and FY 2024 financial reports to determine a state’s ability to use
additional funding and did not select states with extraordinarily low expenditure rates to
receive additional backlog funds. ETA also reviewed states’ narrative proposals to confirm
states’ backlogs and information technology modernization needs. 29 states expressed
interest in additional backlog funding to help them attain staff support, enhance or replace
their current partially automated systems, and/or develop automated systems to more
efficiently process certification requests. ETA validated the proposed uses and need for

funding from the 29 states that applied, to ensure funds were allotted to address system
modernization issues and/or existing backlog to receive additional funding. Based on the
availability of $2,500,000 in funds, and the relative size of the state and their proposed
solutions, ETA established three funding tiers to distribute these awards:

   • Tier 1 = $50,000
   • Tier 2 = $75,000
   • Tier 3 = $100,000

The selected states and corresponding funding amounts for these awards are as follows:

  $50,000              $75,000                   $100,000
  Delaware             Alaska                    Arizona
  Florida              Maine                     Arkansas
  Georgia              Michigan                  California
  Louisiana            New Hampshire             Connecticut
  Vermont              Oklahoma                  Illinois
                       Wyoming                   Indiana
                                                 Maryland
                                                 Massachusetts
                                                 Minnesota
                                                 Montana
                                                 Nebraska
                                                 New Jersey
                                                 North Carolina
                                                 North Dakota
                                                 Ohio
                                                 South Carolina
                                                 Virginia
                                                 Wisconsin

Note: If a state fails to submit the required application materials timely, or decides to refuse
the award, ETA reserves the right to either redistribute such funds to the other selected states
and/or consider additional state(s) for an award, as appropriate.

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 are important to ensure proper
   accounting of funds.
b. Quarterly Performance Report – SWAs must use the web-based State Workforce
   Agency Reporting and Analysis System (SWARAS) 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 are 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);
   • 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);); and
   • Pub. L 119-4, Full-Year Continuing Appropriations and Extensions Act, 2025 BILLS-
      119hr1968eh.pdf

7. Attachment.
   •  Attachment I: Work Opportunity Tax Credit Fiscal Year 2025 State Allotments

                                 U.S. Department of Labor                                      Attachment I
                           Employment and Training Administration
                            Work Opportunity Tax Credit
 FY 2025 State Allotments and Balance after Dissemination to States under Continuing
                            Resolutions (CR) 1 through 2

                        FY 2025 Full     Obligated under    Obligated under      Balance to
                       Year Allotment     CR# 1 (10/1/24     CR# 2 (12/21/24       States
                          Amount        through 12/20/24)   through 3/14/25)
        State

Total                    $18,485,000          $4,101,822            $4,253,398   $10,129,780

Alabama                       341,798             63,204                65,540       213,054
Alaska                         94,957             17,559                18,208        59,190
Arizona                       312,637             72,528                75,209       164,900
Arkansas                      186,089             34,411                35,682       115,996
California                  2,230,506            518,848               538,022     1,173,636
Colorado                      271,721             63,058                65,388       143,275
Connecticut                   154,199             35,810                37,134        81,255
Delaware                      116,492             21,541                22,338        72,613
District of Columbia           94,957             17,559                18,208        59,190
Florida                       904,497            209,810               217,563       477,124
Georgia                       462,574            107,341               111,308       243,925
Hawaii                        119,103             22,190                23,011        73,902
Idaho                         107,544             19,887                20,621        67,036
Illinois                      662,730            153,888               159,574       349,268
Indiana                       311,236             57,553                59,679       194,004
Iowa                          198,212             46,079                47,782       104,351
Kansas                        133,119             30,941                32,085        70,093
Kentucky                      320,813             74,530                77,283       169,000
Louisiana                     282,113             65,422                67,839       148,852
Maine                          94,957             17,559                18,208        59,190
Maryland                      361,672             83,976                87,080       190,616
Massachusetts                 344,886             80,143                83,104       181,639
Michigan                      521,350            121,030               125,502       274,818
Minnesota                     261,123             60,663                62,904       137,556
Mississippi                   188,287             43,681                45,295        99,311
Missouri                      431,254             79,746                82,693       268,815
Montana                        94,957             17,559                18,208        59,190
Nebraska                      120,877             28,092                29,129        63,656
Nevada                        155,593             36,118                37,452        82,023
New Hampshire                  94,957             17,559                18,208        59,190
New Jersey                    425,544             78,690                81,598       265,256
New Mexico                    153,502             35,779                37,102        80,621
New York                    1,135,912            264,050               273,808       598,054
North Carolina                499,537            115,858               120,140       263,539
North Dakota                   94,957             17,559                18,208        59,190
Ohio                          789,477            183,143               189,910       416,424
Oklahoma                      296,509             54,830                56,855       184,824
Oregon                        236,118             54,860                56,887       124,371
Pennsylvania                  644,156            149,669               155,201       339,286
Puerto Rico                   117,286             21,688                22,490        73,108
Rhode Island                  102,839             19,017                19,719        64,103
South Carolina                255,868             59,346                61,539       134,983
South Dakota                   94,957             17,559                18,208        59,190
Tennessee                     591,445            137,697               142,785       310,963
Texas                       1,440,358            334,613               346,978       758,767
Utah                          142,800             26,406                27,382        89,012
Vermont                        94,957             17,559                18,208        59,190
Virginia                      471,551             87,198                90,420       293,933
Washington                    376,940             87,601                90,838       198,501
West Virginia                 119,644             26,406                27,382        65,856
Wisconsin                     294,476             68,462                70,991       155,023
Wyoming                        94,957             17,559                18,208        59,190
    State Total            18,449,000          4,093,834             4,245,114    10,110,052
Virgin Islands                 36,000              7,988                 8,284        19,728