Sponsors
The bill encourages employer-provided training by offering a sizeable tax credit and simplified filing for many small employers—boosting upskilling for lower-paid workers—while imposing new reporting requirements, limiting some tax treatment that can offset benefits, and creating short-term uncertainty about qualifying credentials.
Small employers (and their employees) can claim a tax credit—20% of training spending above their 3-year average (10% if no prior spending)—and may elect to apply part of the credit against payroll taxes or use it against AMT, lowering net training costs and improving short-term cash flow for firms that expand training.
Workers—especially lower-paid/non-highly compensated employees—gain greater access to employer-sponsored training tied to recognized postsecondary credentials, improving skills and potential earnings.
Small businesses with under $5 million in gross receipts face simplified filing rules, reducing compliance burden for many small employers.
Employers will face new reporting obligations—including demographic reporting on race, ethnicity, and gender—and other compliance requirements that increase administrative burden and costs for small firms and for state oversight.
Employers cannot deduct the training expenses used to calculate the credit, which raises taxable income and can substantially offset the credit's value for some firms.
The payroll-tax election is capped at $250,000 per entity and limited by quarterly FICA liability, which may limit the intended near-term cash-flow benefits for many small employers.
Based on analysis of 2 sections of legislative text.
Creates a new 20% (10% in limited cases) business tax credit for employer-paid credentialed worker training, with a payroll-tax election for eligible small and tax-exempt employers.
Introduced December 16, 2025 by S. Raja Krishnamoorthi · Last progress December 16, 2025
Creates a new business tax credit worth 20% of an employer's qualifying worker-training spending above its recent three-year average (10% if the employer had no training spending in the prior three years). The credit covers training that leads to a recognized postsecondary credential and is delivered through registered apprenticeships, WIOA-listed programs, community colleges, career and technical schools, labor organizations, or employer/industry programs. Allows eligible small businesses and qualifying tax-exempt employers to elect to apply part of the credit against their employer payroll tax (subject to a $250,000 entity cap and carryforward rules). The measure disallows a deduction for expenses claimed for the credit, includes the credit in the general business credit rules, requires Treasury and Labor to issue a credential definition, and applies to taxable years beginning after enactment.