[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4463 Introduced in Senate (IS)]
<DOC>
119th CONGRESS
2d Session
S. 4463
To amend the Internal Revenue Code of 1986 to provide a credit against
employer payroll taxes for wages and other expenses paid or incurred
for apprenticeship programs.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
April 30, 2026
Mr. Young introduced the following bill; which was read twice and
referred to the Committee on Finance
_______________________________________________________________________
A BILL
To amend the Internal Revenue Code of 1986 to provide a credit against
employer payroll taxes for wages and other expenses paid or incurred
for apprenticeship programs.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Workforce Apprenticeship Growth and
Education Support Act'' or the ``WAGES Act of 2026''.
SEC. 2. FINDINGS.
Congress finds the following:
(1) Apprenticeships strengthen the American economy by
addressing persistent workforce shortages, particularly in
high-demand and essential industries, including construction,
advanced manufacturing, health care, early childhood education
and care, information technology, transportation and logistics,
automotive repair and maintenance, hospitality, energy,
agriculture, and the skilled trades.
(2) A skilled and resilient workforce is essential to
maintaining the economic competitiveness of the United States
in an increasingly competitive global economy, particularly as
other nations expand investments in workforce training,
technical education, and industrial capacity.
(3) Registered apprenticeship programs are a proven
workforce development model that combines paid on-the-job
learning with related instruction, enabling workers to earn
wages while gaining industry-recognized credentials and skills
aligned with employer needs.
(4) Employers that invest in registered apprenticeship
programs benefit from improved productivity, reduced turnover,
and a more skilled workforce, but often face costs associated
with program development, training, supervision, and related
instruction that may limit broader adoption.
(5) 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.) and regulations issued thereunder establish
a rigorous framework for registered apprenticeship programs,
ensuring high-quality training standards, worker protections,
and nationally recognized credentials.
(6) Expanding employer participation in registered
apprenticeship programs is critical to promoting upward
economic mobility, including for individuals without a four-
year college degree, by providing pathways to higher earnings
and stable, well-paying careers.
SEC. 3. APPRENTICESHIP CREDIT.
(a) In General.--Subchapter D of chapter 21 of the Internal Revenue
Code of 1986 is amended by adding at the end the following new section:
``SEC. 3135. APPRENTICESHIP CREDIT.
``(a) In General.--In the case of an eligible employer, there shall
be allowed as a credit against applicable employment taxes for each
calendar quarter an amount equal to 50 percent of the sum of--
``(1) the qualified wages with respect to each qualified
apprentice of such employer for such calendar quarter, and
``(2) the registered apprenticeship program expenses paid
or incurred by the employer during the calendar quarter.
``(b) Limitations and Refundability.--
``(1) Wages taken into account.--The amount of qualified
wages with respect to any qualified apprentice which may be
taken into account under subsection (a) by the eligible
employer for any calendar quarter shall not exceed $5,000.
``(2) Registered apprenticeship program expenses taken into
account.--The amount of registered apprenticeship program
expenses taken into account by the eligible employer with
respect to any calendar quarter shall not exceed the greater
of--
``(A) $5,000, or
``(B) the lesser of--
``(i) $2,500 for each qualified apprentice
which is an employee of the eligible employer
during such calendar quarter, or
``(ii) $50,000.
``(3) Credit limited to employment taxes.--The credit
allowed by subsection (a) with respect to any calendar quarter
shall not exceed the applicable employment taxes (reduced by
any credits allowed under section 3111) on the wages paid with
respect to the employment of all the employees of the eligible
employer for such calendar quarter.
``(4) Refundability of excess credit.--If the amount of the
credit under subsection (a) exceeds the limitation of paragraph
(3) for any calendar quarter, such excess shall be treated as
an overpayment that shall be refunded under sections 6402(a)
and 6413(b).
``(c) Definitions.--For purposes of this section--
``(1) Applicable employment taxes.--The term `applicable
employment taxes' means the following:
``(A) The taxes imposed under section 3111(b).
``(B) So much of the taxes imposed under section
3221(a) as are attributable to the rate in effect under
section 3111(b).
``(2) Eligible employer.--The term `eligible employer'
means any employer which, during the calendar quarter--
``(A) either--
``(i) maintains a registered apprenticeship
program, or
``(ii) has entered into a written agreement
(including a collective bargaining agreement)
under which the employer agrees to adhere to
the apprenticeship standards formulated and
registered by a registered apprenticeship
program sponsor with respect to qualified
apprentices participating in the registered
apprenticeship program of such sponsor, and
``(B) employs a qualified apprentice.
``(3) Qualified wages.--
``(A) In general.--The term `qualified wages'
means, with respect to any qualified apprentice, wages
paid for service rendered while such qualified
apprentice is participating in a registered
apprenticeship program.
``(B) Limitations.--Such term shall not include any
wages paid for service rendered after the date that is
2 years after the date the qualified apprentice begins
participation in a registered apprenticeship program.
``(4) Wages.--
``(A) In general.--The term `wages' means wages (as
defined in section 3121(a)) and compensation (as
defined in section 3231(e)).
``(B) Allowance for certain health plan expenses.--
``(i) In general.--Such term shall include
amounts paid by the eligible employer to
provide and maintain a group health plan (as
defined in section 5000(b)(1)), but only to the
extent that such amounts are excluded from the
gross income of employees by reason of section
106(a).
``(ii) Allocation rules.--For purposes of
this section, amounts treated as wages under
clause (i) shall be treated as paid with
respect to any employee (and with respect to
any period) to the extent that such amounts are
properly allocable to such employee (and to
such period) in such manner as the Secretary
may prescribe. Except as otherwise provided by
the Secretary, such allocation shall be treated
as properly made if made on the basis of being
pro rata among periods of coverage.
``(5) Qualified apprentice.--
``(A) In general.--The term `qualified apprentice'
means an individual who--
``(i) is an employee of an eligible
employer, and
``(ii) participates in a registered
apprenticeship program pursuant to a written
apprenticeship agreement with the registered
apprenticeship program sponsor entered into
after the date of the enactment of this
section.
``(B) Exception.--Such term shall not include--
``(i) any individual described in
subparagraph (A), (B), or (C) of section
51(i)(1), or
``(ii) any 5-percent owner (as defined in
section 416(i)(1)(B)).
``(C) Participation in a registered apprenticeship
program.--For purposes of subparagraph (A)(ii), an
individual participates in a registered apprenticeship
program if--
``(i) the individual has entered into an
apprenticeship agreement that has been
registered with the Office of Apprenticeship of
the Department of Labor or a recognized State
apprenticeship agency during the first 90 days
of probationary employment with an eligible
employer under a registered apprenticeship
program, and
``(ii) the individual has been certified by
such Office of Apprenticeship or a recognized
State apprenticeship agency as eligible for
probationary employment as an apprentice (as
defined in section 29.2 of title 29, Code of
Federal Regulations (as in effect on the date
of the enactment of this subparagraph)).
``(6) Registered apprenticeship program.--The term
`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 parts 29 and
30 of title 29, Code of Federal Regulations (as in effect on
the date of the enactment of this paragraph).
``(7) Registered apprenticeship program expenses.--
``(A) In general.--The term `registered
apprenticeship program expenses' means expenses (other
than qualified wages) paid or incurred in connection
with a registered apprenticeship program, including--
``(i) related instruction expenses,
``(ii) on-the-job learning expenses,
``(iii) mentor wages,
``(iv) expenses directly associated with
the development, registration, or maintenance
of a registered apprenticeship program, and
``(v) amounts paid or incurred by an
eligible employer to a registered
apprenticeship program sponsor pursuant to a
collective bargaining agreement (or similar
binding agreement) for the purpose of
supporting or funding such program.
``(B) Related instruction expenses.--The term
`related instruction expenses' means the costs of
organized instruction--
``(i) in technical subjects related to the
occupation, and
``(ii) that may be provided in a classroom,
through distance learning, or other means of
instruction, consistent with the requirements
for such instruction under section 29.5(b)(4)
of title 29, Code of Federal Regulations (as in
effect on the date of the enactment of this
paragraph).
``(C) On-the-job learning expenses.--The term `on-
the-job learning expenses'--
``(i) means the costs of training that--
``(I) is provided to a qualified
apprentice while engaged in productive
work in a job, and
``(II) provides knowledge or skills
essential to the full and adequate
performance of the job,
``(ii) includes reimbursement or support
for the costs of such training and of
supervision provided during such training, and
``(iii) does not include the costs of any
wages provided to the qualified apprentice
during the training.
``(D) Mentor wages.--
``(i) In general.--The term `mentor wages'
means wages which--
``(I) are paid by an eligible
employer to an employee who is a
journeyworker (within the meaning of
section 29.2 of title 29, Code of
Federal Regulations (as in effect on
the date of the enactment of this
subparagraph)), and
``(II) are in excess of the base
rate of pay of such employee for pay
periods in which such employee is
providing mentorship or supervisory
services to a qualified apprentice of
such eligible employer.
``(ii) Base rate of pay.--
``(I) In general.--The term `base
rate of pay' means, with respect to any
pay period for any employee providing
mentorship or supervisory services, the
average wages paid for pay periods
occurring over the 12-month period
ending with the pay period before the
date on which such individual began
providing such mentorship or
supervisory services.
``(II) Special rules.--If the
employee was not employed for the
entire 12-month period referred to in
subclause (I), such subclause shall be
applied on the basis of the period
during which such employee was so
employed. The Secretary may provide
rules for the application of this
clause in cases where the employee was
not employed for any period before
providing mentorship or supervisory
services.
``(iii) Limitation on mentor wages.--The
amount of mentor wages which may be taken into
account during a calendar quarter with respect
to any employee providing mentorship or
supervisory services shall not exceed $10,000.
``(8) Registered apprenticeship program sponsor.--The term
`registered apprenticeship program sponsor' means any person,
association, committee, or organization operating a registered
apprenticeship program and in whose name such program is
registered or approved.
``(d) Other Rules.--For purposes of this section--
``(1) Aggregation rules.--All persons which are treated as
a single employer under subsections (a) and (b) of section 52
or subsection (m) or (o) of section 414 shall be treated as a
single taxpayer.
``(2) Certain governmental employers.--
``(A) In general.--This credit shall not apply to
the Government of the United States, the government of
any State or political subdivision thereof, or any
agency or instrumentality of any of the foregoing.
``(B) Exception.--Paragraph (1) shall not apply
to--
``(i) any organization described in section
501(c)(1) and exempt from tax under section
501(a), or
``(ii) any entity described in paragraph
(1) if--
``(I) such entity is a college or
university, or
``(II) the principal purpose or
function of such entity is providing
medical or hospital care.
``(3) Denial of double benefit.--
``(A) Credits.--Any wages or expenses taken into
account in determining the credit allowed under this
section shall not be taken into account for purposes of
determining any credit allowed against the tax imposed
by chapter 1.
``(B) Deductions.--
``(i) Wages.--For purposes of this section,
rules similar to the rules of section 280C(a)
shall apply.
``(ii) Other expenses.--No deduction shall
be allowed under chapter 1 with respect to that
portion of the registered apprenticeship
program expenses (other than wages) taken into
account under this section.
``(4) Coordination with other federal payments.--This
section shall not apply to any qualified wages or registered
apprenticeship program expenses paid or incurred by an eligible
employer if such eligible employer received payments for such
qualified wages or registered apprenticeship program expenses
under the Workforce Innovation and Opportunity Act or any other
federally funded program.
``(5) Election to have apprenticeship credit not apply.--
This section shall not apply to so much of the qualified wages
and registered apprenticeship program expenses paid or incurred
by an eligible employer as such employer elects (at such time
and in such manner as the Secretary may prescribe) to not take
into account for purposes of this section.
``(6) Third party payors.--Any credit allowed under this
section shall be treated as a credit described in section
3511(d)(2).
``(7) Extension of limitation on assessment.--
``(A) In general.--Notwithstanding section 6501,
the limitation on the time period for the assessment of
any amount attributable to a credit claimed under this
section shall not expire before the date that is 6
years after the latest of--
``(i) the date on which the original return
which includes the calendar quarter with
respect to which such credit is determined is
filed,
``(ii) the date on which such return is
treated as filed under section 6501(b)(2), or
``(iii) the date on which the claim for
credit or refund with respect to such credit is
made.
``(B) Deduction for wages and expenses taken into
account in determining improperly claimed credit.--
``(i) In general.--Notwithstanding section
6511, in the case of an assessment attributable
to a credit claimed under this section, the
limitation on the time period for credit or
refund of any amount attributable to a
deduction for improperly claimed apprenticeship
wages and expenses shall not expire before the
time period for such assessment expires under
paragraph (1).
``(ii) Improperly claimed apprenticeship
wages and expenses.--For purposes of this
paragraph, the term `improperly claimed
apprenticeship wages and expenses' means, with
respect to an assessment attributable to a
credit claimed under this section, the wages
and expenses with respect to which a deduction
would not have been allowed if the portion of
the credit to which such assessment relates had
been properly claimed.
``(e) Treatment of Deposits.--The Secretary shall waive any penalty
under section 6656 for any failure to make a deposit of any applicable
employment taxes if the Secretary determines that such failure was due
to the reasonable anticipation of the credit allowed under this
section.
``(f) Regulations and Guidance.--The Secretary, in consultation
with the Secretary of Labor, shall issue such forms, instructions,
regulations, and guidance--
``(1) with respect to the application of the credit under
subsection (a) to third party payors (including professional
employer organizations, certified professional employer
organizations, or agents under section 3504), including
regulations or guidance allowing such payors to submit
documentation necessary to substantiate the registered
apprenticeship program expenses of employers that use such
payors, and
``(2) to prevent the avoidance of the purposes of the
limitations under this section.
Any forms, instructions, regulations, or other guidance described in
paragraph (1) shall require the customer to be responsible for the
accounting of the credit and for any liability for improperly claimed
credits and shall require the certified professional employer
organization or other third party payor to accurately report such tax
credits based on the information provided by the customer.''.
(b) Notice of Availability of Credit.--The Secretary of Labor, in
consultation with the Secretary of the Treasury (or the Secretary's
delegate), shall take such steps as may be necessary or appropriate to
keep employers apprised of the availability of the credit allowed under
section 3135 of the Internal Revenue Code of 1986, as added by this
section.
(c) Clerical Amendment.--The table of sections for subchapter D of
chapter 21 of the Internal Revenue Code of 1986 is amended by adding at
the end the following new item:
``Sec. 3135. Apprenticeship credit.''.
(d) Effective Date.--The amendments made by this section shall
apply to wages paid, and expenses paid or incurred, for calendar
quarters beginning after the date of enactment of this Act.
SEC. 4. TAX TREATMENT OF APPRENTICESHIP AWARDS.
(a) Apprenticeship Awards Treated as Employee Achievement Awards.--
(1) In general.--Section 274(j)(3)(A)(i)(I) of the Internal
Revenue Code of 1986 is amended by striking subclauses (I),
(II), and (III) and inserting the following:
``(I)(aa) transferred by an
employer to an employee for length of
service achievement or safety
achievement and awarded as part of a
meaningful ceremony, or
``(bb) transferred by an employer
to an employee participating in a
registered apprenticeship program in
connection with the training and
curriculum of such program, and
``(II) awarded under conditions and
circumstances that do not create a
significant likelihood of the payment
disguised as compensation.''.
(2) Definitions.--Section 274(j)(4) of such Code is amended
by adding at the end the following new subparagraphs:
``(D) Apprenticeship awards.--An item shall not be
treated as having been provided in connection with the
training and curriculum of a registered apprenticeship
program if such item is received during the recipient's
first 90 days of participating in the registered
apprenticeship program.
``(E) Registered apprenticeship program.--The term
`registered apprenticeship program' has the meaning
given such term under section 3135(c)(6).''.
(b) Increased Limitation.--Paragraph (2) of section 274(j) of the
Internal Revenue Code of 1986 is amended--
(1) by inserting ``($1,500 in the case of an employee
achievement award described in paragraph (3)(A)(i)(I)(bb))''
after ``$400'' in paragraph (A), and
(2) by inserting ``($5,000 in the case of a qualified plan
award which is an employee achievement award described in
paragraph (3)(A)(i)(I)(bb))'' at the end of paragraph (B).
(c) Effective Date.--The amendments made by this section shall
apply to awards transferred after the date of enactment of this Act.
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