RETAIN Act
- Bill Number
- H.R. 3308
- Origin Chamber
- House
- Congress
- 119th Congress, Session 1
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2025-05-08: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- Last Updated
- 2025-12-05T06:41:35Z
AI-Generated Summary
Purpose of the Legislation
The RETAIN Act aims to tackle the national shortage of qualified educators and school leaders in early childhood, elementary, and secondary education by providing financial incentives. It focuses on rewarding long-term retention, particularly for those serving high-need students in under-resourced areas, to improve student outcomes and support a diverse workforce.
Key Provisions
- Refundable Tax Credit (Section 36C of the Internal Revenue Code): Eligible educators and school staff can claim a credit against their federal income taxes, which is refundable (meaning they receive a payment even if they owe no taxes). The credit amount depends on continuous years of employment in qualifying roles:
- Year 1 and 2: $5,800 each.
- Years 3–4: $7,000 each.
- Years 5–9: $8,700 each.
- Year 10: $11,600.
- Years 11–15: $8,700 each.
- Year 16: $7,000.
- Years 17–20: $5,800 each.
- After 20 years: $0.
- For the first year, employment must last at least 4 months before the tax year starts.
- Amounts adjust for inflation starting in 2027, based on cost-of-living changes (rounded to the nearest $100).
- Eligible Positions: Includes early childhood educators (with required degrees or enrollment in degree programs and state credentials), program directors, home-based providers, K-12 teachers (certified or pursuing certification), paraprofessionals (classroom assistants meeting state standards), school-based mental health providers, and school leaders (e.g., principals).
- Qualifying Settings: Early childhood programs that serve subsidized children (via programs like Head Start or child care block grants) and meet state quality standards (with a grace period until September 2025 for some accreditation rules). Schools must be public elementary/secondary institutions in high-poverty districts eligible for federal aid under Title I of the Elementary and Secondary Education Act, or those funded by the Bureau of Indian Education.
- Anti-Supplanting Rule: States and local education agencies cannot reduce salaries or loan forgiveness for eligible staff due to this credit; they must maintain prior funding levels.
- Reporting and Administration: Employers report continuous employment years on W-2 forms. The Departments of Education and Health and Human Services share data with the IRS to verify eligibility. The credit applies to tax years starting after December 31, 2025.
- Data Collection (Section 5): The Department of Labor, with input from Treasury, Education, and Health and Human Services, must create and annually update an online data series tracking average teacher and early childhood educator salaries, broken down by school type (high-poverty vs. others), region, and education level.
Significant Changes to Existing Law
- Adds a new Section 36C to the Internal Revenue Code, creating the first federal tax credit specifically for educator retention based on service length.
- Modifies W-2 wage reporting (Section 6051) to include years of continuous employment in these roles, enabling IRS verification.
- Makes conforming updates to tax code sections on deficiencies (Section 6211) and unclaimed property (31 U.S.C. Section 1324), integrating the credit into existing refundable credit frameworks.
- No direct changes to education laws, but references and builds on definitions from the Elementary and Secondary Education Act, Head Start Act, and related statutes.
Potential Impacts
- On Citizens: Provides direct financial relief to educators, potentially increasing retention rates and attracting diverse talent to teaching, especially in high-poverty areas. This could lead to better student academic performance, attendance, and mental health support, while reducing reliance on public assistance among low-paid educators.
- On Government Agencies: The IRS will handle credit claims and payments, increasing administrative workload and costs (estimated via congressional budgeting processes). Education and Health departments must share data, potentially improving coordination. Labor's new data series could inform future policy without major new burdens.
- On International Relations: No direct impacts; the bill is domestic-focused on U.S. education and tax policy.
Main Stakeholders Affected
- Educators and School Staff: Primary beneficiaries, including teachers, paraprofessionals, early childhood workers, mental health providers, and leaders in qualifying roles, who gain tax incentives tied to tenure.
- Students and Families: Especially in high-need, low-income, or rural/Indian Education areas, who may see improved education quality and stability from reduced teacher turnover.
- Schools and Programs: Public K-12 schools and early childhood centers in eligible districts/programs, which could retain staff without losing state/local funds.
- State and Local Governments: Education agencies must comply with anti-supplanting rules and data requests, potentially affecting budgeting.
- Taxpayers: Fund the credits through federal revenue, supporting broader workforce stability in education.
Notable Legal, Constitutional, or Political Implications
- Legal: The refundable credit expands access to federal support for low-income educators (many with incomes below $50,000), similar to existing credits like the Earned Income Tax Credit. It requires IRS rulemaking for verification, with potential for audits on employment continuity. The anti-supplanting provision enforces maintenance of effort, enforceable via Education Department oversight.
- Constitutional: Aligns with Congress's authority under Article I to levy taxes and provide for the general welfare, promoting education as a public good without infringing on state rights (as it supplements, not replaces, local funding).
- Political: Addresses documented teacher shortages (e.g., 300,000 departures in 2020–2022) and pay disparities, potentially bipartisan appeal in education reform. Could spark debates on federal tax spending priorities versus direct aid, with implications for workforce diversity and equity in high-poverty schools. Referred to House Ways and Means and Education committees, indicating focus on tax and labor policy intersections.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Rep. Schneider, Bradley Scott [D-IL-10]
Cosponsors (2)
Rep. Stevens, Haley M. [D-MI-11], Rep. Craig, Angie [D-MN-2]
Recent Actions
- 2025-05-08: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-05-08: Referred to the Committee on Ways and Means, and in addition to the Committee on Education and Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
- 2025-05-08: Introduced in House
- 2025-05-08: Introduced in House
Bill Versions
- Retaining Educators Takes Added Investment Now Act — issued 2025-05-08 — PDF (18 pages)