WAGES Act of 2026

The WAGES Act of 2026 amends the Internal Revenue Code to create a tax credit for employers who pay wages and expenses for registered apprenticeship programs, and it also modifies tax rules for apprenticeship awards. The bill aims to encourage employer participation in registered apprenticeships by offsetting some costs.

Sec. 3, Apprenticeship credit: This section adds a new tax credit for eligible employers equal to 50% of qualified wages (up to $5,000 per apprentice per quarter) and registered apprenticeship program expenses (up to the greater of $5,000 or the lesser of $2,500 per apprentice or $50,000 per quarter). The credit is limited to certain employment taxes, but any excess is refundable. It defines key terms: eligible employers must maintain or agree to a registered apprenticeship program and employ a qualified apprentice; qualified wages exclude wages after 2 years; qualified apprentices must be employees in a registered program, with exceptions for certain owners and related individuals; registered apprenticeship program expenses include instruction, on-the-job learning, mentor wages (up to $10,000 per mentor per quarter), and sponsor payments. The credit does not apply to federal, state, or local governments (except certain nonprofits, colleges, or medical entities), and it coordinates with other federal payments and prevents double benefits. The Treasury may waive deposit penalties for reasonable credit anticipation and must issue guidance for third-party payors.

Sec. 4, Tax treatment of apprenticeship awards: This section expands the definition of employee achievement awards to include items transferred to apprentices in connection with a registered apprenticeship program, but not during the first 90 days. It increases the deduction limits for such awards to $1,500 per employee (or $5,000 for qualified plan awards). These changes apply to awards transferred after the bill's enactment.