The LEAP Act (Leveraging and Energizing America’s Apprenticeship Programs Act) would create a new tax credit for employers that hire and support participants in qualified apprenticeship programs. Under proposed New IRC Section 45BB, employers could claim a credit of $1,500 for each apprenticeship employee that exceeds an “applicable apprenticeship level,” with a cap of creditable years per apprentice of two. The applicable level is 80% of the employer’s average number of apprenticeship employees over the prior three years (rounded down), with zero if the employer had no such apprentices in those years. The bill also includes an industry-specific exception for NAICS code sectors beginning with 23 (primarily construction) that would bar the credit unless the employee is a pre-apprenticeship graduate currently enrolled in an apprenticeship program and the employer participates in or sponsors an apprenticeship program. It defines key terms (apprenticeship employee and apprenticeship program) and provides rules on interaction with other credits and double-counting. The credit would apply to individuals starting apprenticeship programs after enactment. The bill also contains a separate, unrelated provision to reduce government printing costs and increase transparency in public publications.
Key Points
- 1Credit amount and scope: Establishes a credit of $1,500 for each apprenticeship employee who exceeds the applicable apprenticeship level in a taxable year; credit is part of the general business credit and subject to the usual cross-credit rules.
- 2Applicable apprenticeship level: Calculated as 80% of the employer’s average number of apprenticeship employees for the three prior years, rounded down. If the employer had no apprenticeship employees in the prior three years, the applicable level is zero. If the employer adds new apprenticeship programs, the first-year level can be zero.
- 3Eligibility and definitions:
- 4- Apprenticeship employee: an employee in an officially recognized apprenticeable occupation (per the DOL Office of Apprenticeship) and currently enrolled in a registered apprenticeship program.
- 5- Apprenticeship program: a registered program defined in Section 3131(e)(3)(B) of the Internal Revenue Code.
- 6- This ties the credit to registered apprenticeships overseen by the Department of Labor.
- 7Industry exclusions and pre-apprenticeships: No credit for employees in sectors with NAICS code 23 (construction) unless the employee is a pre-apprenticeship graduate currently enrolled in an apprenticeship program and the employer participates in or sponsors an apprenticeship program. A pre-apprenticeship program must prepare participants for entry into an apprenticeship, involve a formal agreement for entry into a sponsor program, and include training aligned with industry standards, without displacing paid workers.
- 8Interaction with other credits and rules: The apprenticeship credit reduces other credits the employer might claim for the same employee (coordination with sections 45A, 51(a), and 1396(a)). It also follows the “no double benefit” rule by denying a double benefit under §280C for related items.
- 9Effective date: The provisions apply to individuals commencing apprenticeship programs after enactment.
- 10Related government cost provision: A separate Section 3 would require the White House/OMB to propose ways to reduce printing costs, promote online access, and improve transparency in government publications (with specific disclosure requirements).