Employee Training Tax Credit Proposed

A bipartisan group of Senators and Congressmen have introduced the Investing in American Workers Act of 2021, a bill to provide business tax credits for increasing investment in employee training. The credit is modeled after the Research & Development tax credit and would give businesses a credit equal to 20% of their increased training expenditures. The expenditures would have to fall within a range of “qualified training” which is generally defined as “training that results in the attainment of a recognized postsecondary credential.”

Similar to the R&D credit, there is an option that would enable small businesses to claim the credit against payroll tax rather than income tax.

A press release from Congressman Tom Emmer (R-MN) notes: “Right now, many companies have almost no direct financial incentive to invest in their workers. In fact, the current U.S. tax code offers a Research and Development (R&D) tax credit for employers that make long-term investments in innovation – such as computers, buildings, and machines – but not workers. In order to ensure the nation’s workforce is better prepared for a post-pandemic 21st century economy, tax and accounting systems need to be updated to promote these same kinds of investments in workforce training.”

The text of the bill can be found here.

Learn more about the R&D Tax Credit here.

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