S. 4463

[Congressional Bills 119th Congress]
[From the U.S. Government Publishing Office]
[S. 4463 Introduced in Senate (IS)]

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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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