The Investing in American Workers Act creates a new federal tax credit to incentivize employers to invest in worker training programs. Employers can claim a credit equal to 20 percent of qualified training expenditures that exceed their average spending from the previous three years, with a reduced 10 percent rate for new training providers. The credit applies only to training for non-highly compensated employees (those earning no more than 60 percent of the annual threshold used for retirement plan rules) and covers only programs leading to recognized postsecondary credentials, such as apprenticeships, industry certificates, degrees from community colleges, or training from labor organizations and industry partnerships.
The legislation offers special provisions for small businesses, allowing those with less than $5 million in annual gross receipts to redirect their training credit toward payroll taxes instead of income taxes, with a $250,000 annual limit. The law also directs the Treasury Department to create simplified filing procedures for small employers and requires the Department of Labor to issue regulations within one year clarifying what qualifies as a recognized credential. The tax credit takes effect for taxable years beginning after the bill's enactment.
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