Sponsor
S. Raja Krishnamoorthi
Representative · D-IL
Representative · D-IL
The bill incentivizes employer-funded, credentialed training—reducing employers' net training costs and expanding worker upskilling—while imposing new reporting requirements, limiting some tax benefits (deduction disallowance and payroll-tax caps), and creating short-term regulatory uncertainty that will temper benefits for some employers.
Workers—particularly lower-paid and mid-career employees—gain greater access to employer-sponsored training that leads to recognized postsecondary credentials, improving skills and long-term job prospects.
Employers can claim a refundable tax credit (20% above a 3‑year average; 10% if no prior spending) for increased training spending, lowering net training costs and encouraging more employer investment in workforce development.
Qualified small businesses and tax-exempt organizations can elect to apply part of the credit against payroll taxes and the credit can be used against AMT in some cases, improving near-term cash flow and making the credit more usable for smaller employers.
Small employers face new reporting and compliance obligations—including demographic reporting on race, ethnicity, and gender—which increases administrative burden and costs for businesses and may require new systems or staff time.
Employers cannot deduct the portion of training expenses used to calculate the credit, which raises taxable income and can offset some or much of the tax benefit from the credit.
The payroll-tax election is capped at $250,000 per entity and limited by quarterly FICA liability, which constrains the cash‑flow advantage for some small employers and tax‑exempt entities.
Based on analysis of 2 sections of legislative text.
Creates a new general business tax credit equal to 20% (10% in certain cases) of incremental employer-paid credential-based training spending and allows small employers to elect a payroll-tax offset up to a cap.
Official title: To amend the Internal Revenue Code of 1986 to provide a credit for employer-provided worker training.
Introduced December 16, 2025 by S. Raja Krishnamoorthi · Last progress December 16, 2025
Creates a new nonrefundable general business tax credit for employer-paid worker training equal to 20% of qualifying training spending above a 3‑year historical baseline (10% if no prior spending). It defines eligible training and expenditures, disallows a deduction for amounts claimed, allows eligible small businesses and certain tax‑exempt employers to elect to apply part of the credit against payroll tax up to an entity-level cap, requires simplified filing rules for smaller employers, and directs regulatory guidance on credential definitions; effective for taxable years beginning after enactment.