Employer wage credit

(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:

45U.

Employer wage credit

(a)

In general

For purposes of section 38, the employer wage credit determined under this section with respect to any employer for any taxable year is an amount equal to 10 percent of the excess (if any) of— (1)the aggregate amount of wages paid or incurred to specified employees during the calendar year which ends with or within such taxable year, over (2)the aggregate amount of wages paid or incurred to specified employees during the calendar year immediately preceding the calendar year described in paragraph (1). (b)

Limitations

(1)

In general

The amount of the credit determined under subsection (a) with respect to any employer for any taxable year shall not exceed $500,000. (2)

Limitation on increase which may be taken into account with respect to each employee

The amount of wages taken into account under subsection (a)(1) with respect to any employee shall not exceed the sum of $25,000 plus the amount of wages taken into account under subsection (a)(2) with respect to such employee. (c)

Specified employees

For purposes of this section, the term specified employee means any employee who— (1)was employed continuously in one or more trades or businesses of the employer during both calendar years described in subsection (a), and (2)earned wages not in excess of $75,000 during the calendar year described in subsection (a)(2). (d)

Other definitions and special rules

For purposes of this section— (1)

Wages

The term wages has the meaning given such term by section 3306(b) (determined without regard to any dollar limitation contained in such section). Such term shall not include any amount taken into account in determining any other credit allowed under this subpart. (2)

Predecessor and successor

Any reference in this paragraph to an employer shall include a reference to any predecessor of, or successor to, such employer. (3)

Aggregation rule

All persons treated as a single employer under subsection (b), (c), (m), or (o) of section 414 shall be treated as one employer. (4)

Inflation adjustment

(A)

In general

In the case of a taxable year beginning after 2022, the $500,000 and $75,000 amounts in subsections (b) and (c) shall each be increased by an amount equal to— (i)such dollar amount, multiplied by (ii)the cost-of-living adjustment determined under subparagraph (B) for the calendar year in which the taxable year begins. (B)

Cost-of-living adjustment

For purposes of this paragraph, the cost-of-living adjustment for any calendar year is the percentage (if any) by which— (i)the CPI for the preceding calendar year, exceeds (ii)the CPI for calendar year 2021. (C)

CPI for any calendar year

For purposes of this paragraph, the CPI for any calendar year shall be determined as provided in section 1(f)(4). (D)

Rounding

If any amount as adjusted under subparagraph (A) is not a multiple of $1,000, such amount shall be rounded to the next lowest multiple of $1,000. (5)

Election to have credit not apply

A taxpayer may elect to have this section not apply for any taxable year. Rules similar to the rules of paragraphs (2) and (3) of section 51(j) shall apply for purposes of this paragraph.

(b)

Credit To be part of general business credit

Section 38(b) of such Code is amended by striking plus at the end of paragraph (32), by striking the period at the end of paragraph (33) and inserting , plus, and by inserting after paragraph (33) the following new paragraph:

(34)the employer wage credit determined under section 45U.

(c)

Denial of double benefit with deductions

Section 280C(a) of such Code is amended by inserting 45U(a), after 45S(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 the item:

Sec. 45U. Employer wage credit.

(e)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2021.