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Legislative staff review EmTech tax credit; unions and workforce officials press for changes to include JATC apprenticeship programs
Summary
Staff reviewed the Trades Education and Training (EmTech) tax credit, explaining eligibility, limits and past software issues; workforce and union representatives urged targeting the credit to high-demand industries and adjusting eligibility so joint apprenticeship training committees and employers that contribute to them can claim benefits.
The Revenue Interim Committee reviewed the Trades Education and Training income-tax credit, heard state workforce officials describe labor shortages, and received requests from apprenticeship trainers to adjust eligibility.
Meghan Moore briefed the committee on the credit, enacted in 2021 and currently set to terminate in 2028, which gives employers a nonrefundable credit equal to 50% of qualified training expenses (maximum $2,000 per employee and $25,000 per employer annually). Moore said the credit excludes expenses paid with grants and cannot be claimed where the employer takes a deduction for the same cost. She flagged an early implementation issue in tax year 2021, when some employees mistakenly attempted to claim the credit; the Department of Revenue subsequently corrected the processing and added a dedicated worksheet for the credit.
Commissioner Sarah Swanson of the Department of Labor and Industry told the panel the state needs targeted investments. "We need 350,000 new skilled trained workers to come online in each of these categories over the next decade and we are not currently prepared to do that," she said, urging the committee to align incentives with the governor's 406 Jobs Initiative and prioritize high-need sectors such as construction and healthcare.
Representatives of the Montana Building and Construction Trades Council and the Montana Electrical JATC asked the committee to revise credit rules so employers that participate in joint apprenticeship training committees (JATCs) can qualify. Jay Reardon said many training employers cannot claim the credit because the training is paid through a joint committee rather than charged directly to an individual employer. Chris McGowan of the Montana Electrical JATC explained that "we train electrical apprentices for union contractors" and that the current statutory structure makes many apprenticeship sponsors ineligible for the EmTech credit.
Committee members asked DOR and DLI staff to examine whether the credit can be restructured to capture more apprenticeship activity without creating control or fraud vulnerabilities. Derek Bell of DOR described the 2021 software timing issue and confirmed that a separate EmTech worksheet is now available.
What happens next: staff will follow up with DOR and DLI to provide modeling on who currently uses the credit, whether nonresident or part-year filers affect counts, and options for making the credit accessible to JATC arrangements. Committee members signaled interest in comparing EmTech with the apprenticeship tax credit and in assessing whether a targeted grant or program might better meet workforce needs than a tax credit.
Provenance: Topic starts at SEG 1640 (Moore's EmTech presentation) and includes public testimony from SEG 1790 to SEG 1924.
