WAGES Act: a 50% tax credit on employer apprenticeship costs
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Contractors who invest in registered apprenticeship programs could soon see real financial relief. On National Apprenticeship Day, Rep. Nathaniel Moran (R-TX) and Sen. Todd Young (R-IN) introduced the Workforce Apprenticeship Growth and Education Support (WAGES) Act (H.R. 8624/S. 4463). The bill would create a refundable apprenticeship tax credit, claimed against payroll taxes, equal to 50% of eligible apprentice wages and qualified apprenticeship program expenses.
Want to see this bill become law? Urge your lawmakers to support the WAGES Act through ACCA’s action alert.
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Upfront costs of building a registered apprenticeship program or hiring apprentices through a partner program can be a serious barrier for small and mid-sized HVACR contractors. The WAGES Act is designed to offset many of those costs. It also specifically identifies construction, energy, and the skilled trades as industries facing workforce shortages that need additional apprenticeship investment.
How much is the WAGES Act apprenticeship tax credit?
Employers could claim 50% of qualified apprentice wages. Qualifying wages are capped at $5,000 per apprentice per calendar quarter, which works out to a maximum wage credit of $2,500 per apprentice, per quarter.
The credit doesn’t stop at wages. Employers could also claim 50% of eligible apprenticeship program expenses, including:
- Related classroom instruction
- On-the-job training costs
- Mentor and supervisor wages
- Program development, registration, and administration
- Contributions to registered apprenticeship program sponsors
Program expenses have a separate cap: generally, the greater of $5,000 per quarter or up to $2,500 per apprentice, with an overall limit of $50,000 per quarter.
One feature stands out for smaller contractors: the credit is refundable. If the credit exceeds an employer’s payroll tax liability, the excess comes back as a refund. Businesses receive the full value of the credit regardless of their tax bill.
Which employers qualify for the apprenticeship tax credit?
The credit is available to employers that operate their own registered apprenticeship program or participate through a written agreement with a registered apprenticeship program sponsor. A few key parameters:
- Apprentices must be enrolled in a U.S. Department of Labor or state-registered apprenticeship program.
- Eligible wages may only be claimed during the apprentice’s first two years in the program.
- Wages already reimbursed through WIOA or other federal workforce programs are excluded, preventing duplicative federal funding.
How the WAGES Act supports HVACR workforce development
The labor shortage remains contractors’ top policy concern, and too many federal incentives still steer students toward four-year universities and a lifetime of debt. That’s why leveling the playing field for the skilled trades anchors ACCA’s workforce agenda. As we continue pursuing streamlined employer access to CTE funding through the Employer-Directed Skills Act, tax incentives for in-house training also rated as one of contractors’ most popular workforce solutions.
While we would have preferred eligibility beyond registered apprenticeships, the WAGES Act is an important first step. It reinforces ACCA’s support for employer-led workforce development and reduces the financial burden on contractors investing in apprentice recruitment and training. More employer participation in registered apprenticeship programs means more help addressing the HVACR technician shortage.
Because the credit covers training, mentorship, and program administration costs rather than wages alone, it goes further than a traditional hiring incentive, particularly for smaller HVACR businesses looking to establish or grow a registered apprenticeship program.
Congress needs to hear from the contractors this bill would support. Take two minutes to urge your lawmakers to support the WAGES Act through ACCA’s action alert.
Posted In: Government, Top Priorities, Workforce
