Apprenticeship infrastructure tax credit for employers

(a)

In general

Subpart D of part IV of subchapter A of chapter 1 of the Internal Revenue Code of 1986 is amended by adding at the end the following new section:

45BB.

Apprenticeship infrastructure tax credit for employers

(a)

In general

For purposes of section 38, the apprenticeship infrastructure tax credit determined under this section for the taxable year is an amount equal to the sum of the applicable credit amounts determined during the apprenticeship credit period with respect to each apprenticeship employee of the employer. (b)

Applicable credit amount

For purposes of this section, the applicable credit amount with respect to an apprenticeship employee shall be an amount equal to— (1)in the case of an apprenticeship employee not described in paragraph (2), $3,000, and (2)in the case of a recently separated veteran, a member of the National Guard or reserve component of the Armed Forces, or a military spouse, $6,000.

The applicable credit amount with respect to an apprenticeship employee for taxable years beginning after the end of the apprenticeship credit period (determined without regard to subsection (c)(2)) shall be zero.

(c)

Apprenticeship credit period

For purposes of this section— (1)

In general

The apprenticeship credit period with respect to an apprenticeship employee shall be— (A)the taxable year during which such employee first enrolls in the employer’s qualified registered apprenticeship program, and (B)the succeeding taxable year if the qualified registered apprenticeship program in which such employee is enrolled is— (i)is a time-based or hybrid program that requires 3,000 or more on-the-job learning hours, or (ii)is a competency-based program with 3,000 or more on-the-job learning hours. (2)

Carryforward year

The apprenticeship credit period with respect to an apprenticeship employee shall include the taxable year succeeding the taxable year described in subparagraph (A) or (B), as the case may be, in the case a credit carryforward to such succeeding taxable year with respect to an apprentice employee under subsection (d)(7). (d)

Definitions and special rules

For purposes of this section— (1)

Apprenticeship employee

(A)

In general

The term apprenticeship employee means an individual who— (i)is a new hire employed by an apprenticeship employer, and (ii)enrolled under a written agreement in a qualified registered apprenticeship program with respect to an infrastructure-related occupation. (B)

Infrastructure-related occupation

(i)

In general

The term infrastructure-related occupation means an occupation identified by the Secretary of Labor as eligible for the credit determined under this section. (ii)

Initial list applicable to 2026

For taxable years beginning in 2026, such term shall include occupations within the following major groups as defined in the Occupational Information Network (ONET): (I)47–0000 Construction and Extraction Occupations. (II)49–0000 Installation, Maintenance, and Repair Occupations. (III)51–0000 Production Occupations. (IV)15–1200 Computer, Information Technology, and Security Occupations. (iii)

Subsequent years

Occupations shall be identified under this subparagraph by utilizing standardized and occupation specific descriptors listed in the Occupational Network (ONET), and such occupations shall be updated annually consistent with customary tax document deadlines. (C)

Exceptions

The term apprenticeship employee shall not include any apprentice— (i)hired more than 90 days prior to enrollment into the qualified registered apprenticeship program, or (ii)reported via a 1099 contractor rather than Form W–2, based on Internal Revenue Service standards. (2)

Apprenticeship employer

(A)

In general

The term apprenticeship employer means an employer that has entered into an agreement with a qualified registered apprenticeship program for the placement of apprenticeship employees. (B)

Exceptions

Such term shall not include an employer— (i)which is exempt from income tax under this chapter, or (ii)which is the sponsor of the registered apprenticeship program, or is related to the sponsor for which the apprenticeship employee is enrolled. (3)

Qualified registered apprenticeship program

The term qualified registered apprenticeship program means an apprenticeship registered under the Act of August 16, 1937 (commonly known as the National Apprenticeship Act; 50 Stat. 664, chapter 663; 29 U.S.C. 50 et seq.) that meets the standards of subpart A of part 29 and part 30 of title 29, Code of Federal Regulations. (4)

Recently separated veteran

The term recently separated veteran means any veteran who is enrolled into the qualified registered apprenticeship program to which the credit relates not more than 4 years after having been discharged or released from active duty in the Armed Forces of the United States. (5)

Member of National Guard or reserve component of Armed Forces

The term member of the National Guard or reserve component of the Armed Forces means any member of a reserve component of the Armed Forces (as defined in section 10101 of title 10, United States Code). (6)

Military spouse

The term military spouse means an individual who is legally married to— (A)a member of the Armed Forces on active duty, (B)a member of the National Guard or reserve component, or (C)a veteran who was discharged or released from active duty in the Armed Forces of the United States not before the 4-year period ending on the date the individual enrolls in the qualified registered apprenticeship program to which the credit relates. (7)

New hire

The term new hire means an individual who first begins work as an employee for the employer not more than 90 days before such individual’s enrollment in qualified registered apprenticeship program to which the credit determined under this section with respect to the employee relates. (8)

Reduced credit where apprentice employed for fewer than 180 days

(A)

In general

In the case of a taxable year during which the apprenticeship employee is employed under a qualified apprenticeship program of the employer for at least 90 days, but fewer than 180 days, the applicable credit amount with respect to such employee for such taxable year shall be reduced to the amount which bears the same ratio to the applicable credit amount with respect to such employee (determined without regard to this subparagraph) as— (i)the number of calendar days during the taxable year that the apprenticeship employee is so employed, bears to (ii)180. (B)

Fewer than 90 days

In the case of a taxable year during which the apprenticeship employee is employed under a qualified apprenticeship program of the employer for fewer than 90 days, the applicable credit amount with respect to such employee for such taxable year shall be zero. (C)

Carryforward

The amount by which the credit amount is reduced under subparagraph (A) or (B) with respect to an apprenticeship employee for any taxable year may be carried forward to increase the applicable credit amount otherwise determined with respect to the employee under this section for the succeeding taxable year (determined without regard to this subparagraph and subsection (c)(2)). Any amount carried forward under the preceding sentence shall be subject to any reduction applicable with respect to the employee under subparagraphs (A) and (B). (9)

Coordination with other credits

The amount of credit otherwise allowable under this chapter with respect to compensation paid to any apprenticeship employee shall be reduced by the credit determined under this section with respect to such employee. (10)

No credit allowed in case laid-off apprentice

No credit shall be allowed under this section with respect to an apprenticeship employee if during the taxable year such employee is involuntary terminated by reason of a reduction in workforce or job elimination, business closure, downsizing, or restructuring, or any other non disciplinary termination initiated by the employer. (11)

No credit allowed in case of remuneration from apprenticeship employee

(A)

In general

No credit shall be allowed under this section with respect to an apprenticeship employee if such apprenticeship employee provides any remuneration (including tuition, application fees, or other payments) to either the apprenticeship employer or the sponsor of the qualified registered apprenticeship program in connection with the apprenticeship employee’s participation in such program. (B)

Exception for public or non-profit funding

Subparagraph (A) shall not apply to remuneration provided by the apprenticeship employee if such remuneration is sourced from public funding or private non-profit or foundational organizations intended to serve or support apprenticeship employees, including funding from the Workforce Innovation and Opportunity Act, Pell Grants, the Supplemental Nutrition Assistance Program, Temporary Assistance for Needy Families, or other similar public or private non-profit or foundational organizations. (e)

Apprenticeship tax credit eligibility certificate

(1)

In general

No credit shall be allowed to an employer under this section with respect to an apprenticeship employee under an apprenticeship program, unless the employer has received an apprenticeship tax credit eligibility certificate with respect to such apprenticeship employee. (2)

Issuance

The Secretary of Labor shall use data from the Registered Apprenticeship Partners Information Database System (hereinafter in this subsection referred to as RAPIDS) to issue an apprenticeship tax credit eligibility certificates to apprenticeship employers not later than 31 days after the end of each calendar quarter. Such certificate shall include the following: (A)Information identifying to the sponsor of the qualified registered apprenticeship program, including— (i)the name of the sponsor, (ii)the registration agency responsible for monitoring the sponsor, (iii)the registration number of the registered apprenticeship program, (iv) the O–Net Code for occupation of training, and (v)the RAPIDS Code for the apprenticeable occupation approved by the Department of Labor Office of Apprenticeship. (B)Information identifying the apprenticeship employer, including— (i)the full legal name of the apprenticeship employer, (ii)the mailing address of the apprenticeship employer, (iii)the employer registration number assigned in RAPIDS, and (iv)the apprenticeship employer’s Federal Employer Identification Number. (C)Information identifying the apprenticeship employee, including— (i)the full legal name of such employee, (ii)the social security number or taxpayer identification number of such employee, (iii)the dates of apprenticeship, including the enrollment date, expected completion date, the actual completion date (if applicable), the date hired by the apprenticeship employer, the termination date (if any), and the reason for exit if such employee is not employed on the last day of the period to which such certificate relates, and (iv)confirmation that the apprenticeship employee is a new hire with respect to the employer and is reported via Form W–2. (3)

Updating apprentice status rules

(A)

Reporting requirements

The Secretary of Labor shall update the reporting requirements set forth in part 29 of title 29, Code of Federal Regulations, which otherwise require a sponsor to update the status of an apprentice within 45 days of any change in such status, to further require that the sponsor ensure all employment status updates are completed within 30 days after the close of a calendar quarter in order to facilitate the issuance of the apprenticeship tax credit eligibility certificate not later than 31 days after the end of the calendar quarter. The Secretary of Labor may prescribe regulations to ensure compliance with this reporting requirement. (B)

Apprenticeship agreements

The Secretary of Labor shall update apprenticeship agreement forms to include the following: (i)The date the apprenticeship employee was hired by the apprenticeship employer. (ii)The apprenticeship employer confirmation that the apprenticeship employee is reported via Form W–2. (iii)The assigned registration number of the apprenticeship employer verifying the apprenticeship employer has a formal agreement with the sponsor of the qualified registered apprenticeship program. (f)

Termination of credit based on volume cap

(1)

In general

This section shall not apply for any taxable year beginning after the date on which the Secretary (in consultation with the Secretary of Labor) certifies that the amount of credit determined under this section has reached an amount equal to $5,000,000,000. (2)

Tracking and reporting

(A)

Secretary of Treasury

(i)

In general

The Secretary shall for purposes of paragraph (1) monitor and regularly calculate the amount of credit determined under this section and publicly certify when the limitation under paragraph (1) has been reached. (ii)

Annual reporting

The Secretary shall not later than March 31, 2027, and annually thereafter, publish an report that details the total amount of credits determined under this section for taxable years ending in the preceding calendar year, the amount of any under-allocated credits identified under paragraph (4)(A), the take-up rate of certificates issued under this section for the preceding calendar year, and the total number of certificates issued under this section for the preceding calendar year. (iii)

Take-up rate

For purposes of clause (ii), the term take-up rate means the percentage of apprenticeship tax credit eligibility certificates issued under subsection (e) that result in credits determined under this section, as determined by the Secretary. (B)

Secretary of Labor

(i)

In general

The Secretary of Labor, in consultation with the Secretary, shall annually review the determinations made by the Secretary under subparagraph (A) and estimate the extent to which credit limitation under paragraph (1) remains available. (ii)

Commensurate adjustment of qualifying infrastructure-related occupations

Based on such review and estimates, the Secretary of Labor may adjust the list of qualifying infrastructure-related occupations identified under section subsection (e) to limit the issuance of additional apprenticeship tax credit eligibility certificates if necessary to ensure, to the extent practicable, the limitation under paragraph (1) is not exceeded before December 31, 2035. (iii)

Annual reporting

For taxable years beginning after December 31, 2026, any adjustments to the list of qualifying infrastructure-related occupations for a year shall be published by the Secretary not later than September 30 of the preceding year. (3)

Limitation or prioritization when remaining balance is low

(A)

In general

When the remaining balance of credits allowable under this section, as determined by the Secretary under paragraph (2)(A), is less than $1,000,000,000, the Secretary, in consultation with the Secretary of Labor, may prescribe any of the following: (i)Limiting the qualifying infrastructure-related occupations identified under subsection (d)(1)(B) for which apprenticeship tax credit eligibility certificates may be issued. (ii)Directing the issuance of such certificates to focus on apprenticeship employees who are recently separated veterans, members of the National Guard or Reserve Component of the Armed Forces, or military spouses. (B)

Determination of certificates issued

(i)

Use of take-up rate

If the annual report under paragraph (2)(A)(ii) has been issued for the preceding calendar years, the number of certificates issued under this paragraph shall be determined by adjusting the proportional allocation under paragraph (4)(C)(ii)(I) based on the take-up rate reported under paragraph (2)(A)(ii) for such year, to ensure that the estimated credit amount resulting from such issuance does not exceed the remaining balance under this section. (4)

Reallocation of under-allocated credits

(A)

In general

The Secretary may identify, as part of the annual report required under paragraph (2)(A), any under-allocated portion of any apprenticeship infrastructure tax credits or other labor related tax credits for a prior taxable year. (B)

Under-allocated credits

For purposes of this paragraph, the term under-allocated credits means the difference between the estimated credit amounts associated with credits determined under this section for the preceding calendar year (as reported under paragraph (2)(B)) and the actual amount of credits claimed by any taxable entity (as reported under paragraph (2)(A)), to the extent such difference reflects credits that remain available within the volume cap under paragraph (1). (C)

Additional allocation by Secretary of Labor

(i)

In general

Upon notification from the Secretary of under-allocated credits identified under subparagraph (A), the Secretary of Labor may provide for additional allocation of such credits by issuing additional apprenticeship tax credit eligibility certificates for the succeeding calendar year, subject to the limitations of clause (ii). (ii)

Limitations

The limitations of this clause are as follows: (I)

In general

If the annual report under paragraph (2)(A)(ii) has been issued for the preceding calendar year, the number of certificates issued under this paragraph shall be equal to the total number of certificates issued in the preceding calendar year, as reported under paragraph (2)(A)(ii), adjusted by the take-up rate for such year, to ensure that the estimated credit amount resulting from such issuance does not exceed the remaining balance under this section. (II)

No annual report

If the annual report under paragraph (2)(A)(ii) has not been issued for the preceding calendar year, the number of certificates issued under this paragraph shall be equal to the total number of certificates issued in the preceding calendar year increased by 30 percent. (III)

Limitation

The issuance of additional certificates under this paragraph shall not cause the aggregate volume cap under paragraph (1) to be exceeded. (D)

Reporting

The Secretary of Labor shall include in the annual report required under paragraph (2)(B) a summary of any additional allocations made under this paragraph, including the number of additional certificates issued, the estimated amount of credits associated with such certificates, the actual amount of credits determined under this section for the preceding calendar year (as reported by the Secretary under paragraph (2)(A)), and the occupations targeted by the additional allocations. (g)

Regulations

The Secretary shall prescribe such rules as may be necessary or appropriate to carry out the purposes of this section, including guidance for verifying the status of— (1)individuals as recently separated veterans, Members of the National Guard or Reserve Component of the Armed Forces, or military spouses, (2)qualified registered apprenticeship programs, (3)apprenticeship employers and apprenticeship employees, and (4)apprenticeship employees, including that such employees are reported via Form W–2, not a 1099 contractor, based on Internal Revenue Service standards.

(b)

Denial of double benefit

Section 280C(a) of such Code is amended by inserting 45BB(a), after 45S(a),. (c)

Credit made part of general business credit

Section 38(b) of such Code is amended by striking plus at the end of paragraph (40), by striking the period at the end of paragraph (41) and inserting , plus, and by adding at the end the following new paragraph:

(42)the apprenticeship tax credit determined under section 45BB(a).

(d)

Clerical amendment

The table of sections for subpart D of part IV of subchapter A of chapter 1 of such Code is amended by adding at the end the following new item:

Sec. 45BB. Apprenticeship tax credit for employers.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2025.