WAGES Act of 2026
- Bill Number
- S. 4463
- Origin Chamber
- Senate
- Congress
- 119th Congress, Session 2
- Policy Area
- Taxation
- Status
- Introduced
- Latest Action
- 2026-04-30: Read twice and referred to the Committee on Finance.
- Last Updated
- 2026-06-05T15:35:58Z
AI-Generated Summary
Purpose
The Workforce Apprenticeship Growth and Education Support Act (WAGES Act of 2026) aims to encourage employer participation in registered apprenticeship programs—DOL-approved programs that combine paid on-the-job training with classroom instruction leading to industry-recognized credentials. It addresses workforce shortages in industries like construction, manufacturing, health care, and IT by providing financial incentives to offset employer costs.
Key Provisions
- New Tax Credit (IRC Section 3135):
- Eligible employers (those running or adhering to a registered apprenticeship program and employing qualified apprentices) receive a 50% credit against employer payroll taxes (Social Security and Medicare portions) for:
- Qualified wages paid to apprentices (up to $5,000 per apprentice per calendar quarter; limited to first 2 years of participation).
- Registered apprenticeship program expenses (up to the greater of $5,000 or $2,500 per apprentice/$50,000 per quarter), including instruction costs, on-the-job training, mentor wages (excess pay for supervisors, up to $10,000 per mentor per quarter), and program setup fees.
- Credit is refundable if it exceeds quarterly payroll taxes; applies to wages/expenses after enactment.
- Qualified Apprentice: New participants (after enactment) in registered programs, excluding certain individuals (e.g., those denied work opportunity credits, 5% owners).
- Other Rules:
- No credit for most government employers (exceptions for nonprofits, colleges, hospitals).
- Prevents double-dipping with other tax credits/deductions or federal grants.
- DOL and IRS to issue guidance and notify employers.
- Apprenticeship Awards (IRC Section 274(j) Amendments):
- Treats awards to apprentices (e.g., for training milestones) as nontaxable employee achievement awards.
- Increases exclusion limits: $1,500 (individual) or $5,000 (qualified plan) vs. prior $400/$1,600.
Significant Changes to Existing Law
- Adds IRC Section 3135: Introduces first-ever payroll tax credit specifically for apprenticeship wages and expenses (previously no such targeted incentive).
- Amends IRC Section 274(j): Expands tax-free treatment of achievement awards to include apprenticeship-related items (previously limited to length-of-service/safety awards) and raises dollar limits for them.
- References National Apprenticeship Act standards without altering them.
Potential Impacts
- Employers: Lowers net costs of apprenticeships, potentially increasing program adoption and reducing turnover/productivity issues.
- Workers: More entry points to skilled jobs without college degrees, promoting upward mobility and earnings growth.
- Economy: Addresses shortages in key sectors, boosting competitiveness vs. global rivals investing in training.
- Government: IRS administers credits (with 6-year audit window); modest revenue loss offset by workforce gains; DOL promotes awareness.
- No direct international effects.
Main Stakeholders
- Employers: Especially in high-demand industries (e.g., construction, health care, manufacturing).
- Apprentices/Workers: New entrants gaining paid training and credentials.
- Federal Agencies: IRS (tax credit processing), DOL (program oversight, notifications).
- Unions/Program Sponsors: Benefit from employer funding via agreements.
Notable Legal, Constitutional, or Political Implications
- Tax Policy: Refundable payroll tax credit incentivizes private investment; anti-abuse rules (e.g., aggregation, no double benefits) ensure fairness.
- Administrative: Extended IRS audit periods reduce fraud risk; coordination with DOL avoids overlaps with grants like Workforce Innovation Act.
- No Major Constitutional Issues: Standard tax incentive; excludes most public employers to avoid state aid complications.
- Political: Supports workforce development without new spending; findings emphasize economic resilience and non-college pathways.
This summary was generated by AI and may contain inaccuracies. Refer to the official source document for the authoritative text.
Sponsor
Recent Actions
- 2026-04-30: Read twice and referred to the Committee on Finance.
- 2026-04-30: Introduced in Senate
Bill Versions
- Workforce Apprenticeship Growth and Education Support Act — issued 2026-04-30 — PDF (21 pages)