H.R. 10446 – Incentivizing Small Business Employee Retention Act of 2026

119th CONGRESS

2d Session

H. R. 10446

IN THE HOUSE OF REPRESENTATIVES

September 16, 2026

Mr. Latimer (for himself and Mr. Cisneros) introduced the following bill; which was referred to the Committee on Ways and Means

A BILL

To amend the Internal Revenue Code of 1986 to enhance the deduction for expenditures to remove architectural and transportation barriers to certain individuals and to extend and enhance the work opportunity credit, and for other purposes.

Short title

This Act may be cited as the Incentivizing Small Business Employee Retention Act of 2026.

Enhancement of deduction for expenditures to remove architectural and transportation barriers to certain individuals

(a)

Inclusion of improvements in accessibility to internet and telecommunications operations

Section 190(b)(1) of the Internal Revenue Code of 1986 is amended by adding at the end the following new sentence: Such term shall include an expenditure for the purpose of improving accessibility for individuals with disabilities and older adults to any internet or telecommunications services provided within any facility or public transportation vehicle owned or leased by the taxpayer for use in connection with their trade or business..

(b)

Increase in deduction limitation amount

Section 190(c) of such Code is amended by striking $15,000 and inserting $30,000.

(c)

Conforming amendments

(1)

Section 190(b)(1) of such Code, as amended by subsection (a), is amended by striking handicapped and elderly individuals and inserting individuals with disabilities and older adults.

(2)

Section 190(b)(3) of such Code is amended—

(A)

by striking handicapped individual and inserting individual with a disability, and

(B)

by striking Handicapped individual in the heading thereof and inserting Individual with a disability.

(3)

(A)

The heading for section 190 of such Code is amended by striking the handicapped and elderly and inserting individuals with disabilities and older adults.

(B)

The item relating to section 190 in the table of sections for part VI of subchapter B of chapter 1 of such Code is amended by striking the handicapped and elderly and inserting individuals with disabilities and older adults.

(4)

Section 67(d)(1) of such Code is amended by striking a handicapped individual and inserting an individual with a disability.

(5)

Section 263(a)(1)(E) of such Code is amended by striking the handicapped and elderly and inserting individuals with disabilities and older adults.

(d)

Effective date

The amendments made by this section shall apply to taxable years beginning after December 31, 2026.

(e)

Rule of construction

Except as provided in subsection (a), nothing in this section, or the amendments made by this section, shall be construed to modify or expand any definition used in section 190 of the Internal Revenue Code of 1986.

Extension and enhancement of work opportunity credit

(a)

Extension of credit

Section 51(c)(4) of the Internal Revenue Code of 1986 is amended by striking December 31, 2025 and inserting September 30, 2030.

(b)

Increased credit for qualified small businesses

(1)

In general

Section 51 of such Code is amended—

(A)

by redesignating subsections (f) through (k) as subsections (g) through (l), respectively, and

(B)

by inserting after subsection (e) the following new subsection:

(f)

Increased credit for qualified small businesses

(1)

In general

In the case of a qualified small business, the amount of the work opportunity credit determined under this section for the taxable year shall include—

(A)

50 percent of the qualified second-year wages for such year,

(B)

75 percent of the qualified third-year wages for such year,

(C)

90 percent of the qualified fourth-year wages for such year, and

(D)

100 percent of the qualified fifth-year wages for such year.

(2)

Limitation on wages per year taken into account

(A)

In general

The amount of the qualified second-year wages, qualified third-year wages, qualified fourth-year wages, or qualified fifth-year wages which may be taken into account with respect to any individual shall not exceed the applicable amount for the taxable year.

(B)

Applicable amount

For purposes of subparagraph (A), the term applicable amount means—

(i)

in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(II), the dollar amount in effect for the taxable year under subsection (b)(3)(B)(i),

(ii)

in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(iv), the dollar amount in effect for the taxable year under subsection (b)(3)(B)(ii),

(iii)

in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(I), the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iii),

(iv)

in the case of any individual who is a long-term family assistance recipient, the dollar amount in effect for the taxable year under subsection (e)(1)(B), and

(v)

in the case of any individual not described in clause (i), (ii), (iii), or (iv), the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iv).

(3)

Individuals not meeting minimum employment periods

(A)

Reduction of increased credit for individuals performing fewer than 400 hours of service

In the case of an individual who has performed at least 120 hours, but less than 400 hours, of service for the qualified small business during the taxable year, paragraph (1) shall be applied—

(i)

by substituting 30 percent for 50 percent in subparagraph (A) thereof,

(ii)

by substituting 40 percent for 75 percent in subparagraph (B) thereof,

(iii)

by substituting 45 percent for 90 percent in subparagraph (C) thereof, and

(iv)

by substituting 50 percent for 100 percent in subparagraph (D) thereof.

(B)

Denial of increased credit for individuals performing fewer than 120 hours of service

No wages shall be taken into account under paragraph (1) with respect to any individual unless such individual has performed at least 120 hours of service for the qualified small business during the taxable year.

(4)

Special rules for agricultural and railway labor

In the case of a long-term family assistance recipient to whom subparagraph (A) or (B) of subsection (i)(1) applies, rules similar to the rules of such subparagraphs shall apply except that—

(A)

such subparagraph (A) shall be applied by substituting ‘the dollar amount in effect for the taxable year under subsection (e)(1)(B)’ for ‘the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iv)’, and

(B)

such subparagraph (B) shall be applied by substituting 1/12 of the dollar amount in effect for the taxable year under subsection (e)(1)(B) for 1/12 of the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iv).

(5)

Definitions

For purposes of this subsection—

(A)

Qualified small business

The term qualified small business means any person which is a small business concern (as defined in section 3 of the Small Business Act).

(B)

Qualified second-year wages

The term qualified second-year wages means qualified wages—

(i)

which are paid to an individual with respect to whom the qualified small business claimed credit under this section for the qualified first-year wages of such individual, and

(ii)

which are attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subsection (b)(2).

(C)

Qualified third-year wages

The term qualified third-year wages means qualified wages—

(i)

which are paid to an individual with respect to whom the qualified small business claimed credit under this section for the qualified first-year wages and qualified second-year wages of such individual, and

(ii)

which are attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subparagraph (B).

(D)

Qualified fourth-year wages

The term qualified fourth-year wages means qualified wages—

(i)

which are paid to an individual with respect to whom the qualified small business claimed credit under this section for the qualified first-year wages, qualified second-year wages, and qualified third-year wages of such individual, and

(ii)

which are attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subparagraph (C).

(E)

Qualified fifth-year wages

The term qualified fifth-year wages means qualified wages—

(i)

which are paid to an individual with respect to whom the qualified small business claimed credit under this section for the qualified first-year wages, qualified second-year wages, qualified third-year wages, and qualified fourth-year wages of such individual, and

(ii)

which are attributable to service rendered during the 1-year period beginning on the day after the last day of the 1-year period with respect to such individual determined under subparagraph (D).

(6)

Regulations

The Secretary shall prescribe such regulations or other guidance as may be necessary to carry out the purposes of this subsection, including regulations or other guidance providing for requirements for recordkeeping or information reporting for purposes of administering this subsection.

(2)

Conforming amendments

(A)

Section 51 of such Code, as amended by the preceding provisions of this section, is amended—

(i)

in subsection (c)(1), by striking subsection (h)(2) and inserting subsection (i)(2),

(ii)

in subsection (e)—

(I)

in paragraph (1), in the matter preceding subparagraph (A), by striking With and inserting Subject to subsection (f), with, and

(II)

in paragraph (3), by striking subsection (h)(1) and inserting subsection (i)(1), and

(iii)

in subsection (g)(2), by striking subsection (h)(1) and inserting subsection (i)(1).

(B)

Section 45A of such Code is amended—

(i)

in subsection (b)(1)(B), by adding at the end the following new sentence: If any portion of wages are taken into account under subsection (f)(1) of section 51, the preceding sentence shall be applied by substituting 5-year period for 1-year period.,

(ii)

in subsection (c)(5)(A), by striking section 51(i)(1) and inserting section 51(j)(1), and

(iii)

in subsection (e)(3), by striking section 51(k) and inserting section 51(l).

(C)

Section 45S(h)(2) of such Code is amended by striking section 51(j) and inserting section 51(k).

(D)

Section 1396(d)(2)(A) of such Code is amended by striking section 51(i)(1) and inserting section 51(j)(1).

(E)

Section 1397(c) of such Code is amended by striking section 51(k) and inserting section 51(l).

(F)

Section 3111(e)(3)(B) of such Code is amended by striking subsection (i)(3)(A) and inserting subsection (j)(3)(A).

(c)

Inflation adjustment

(1)

In general

Section 51 of such Code, as amended by the preceding provisions of this section, is amended by adding at the end the following new subsection:

(m)

Inflation adjustment

(1)

In general

In the case of any taxable year beginning after 2027, each of the dollar amounts in subsection (b)(3)(B) and the $10,000 amount in subsection (e)(1)(B) shall be increased by an amount equal to—

(A)

such dollar amount, multiplied by

(B)

the cost-of-living adjustment determined under section 1(f)(3) for the calendar year in which the taxable year begins, determined by substituting ‘calendar year 2026’ for ‘calendar year 2016’ in subparagraph (A)(ii) thereof.

(2)

Rounding

Any increase determined under paragraph (1) shall be rounded to the nearest multiple of $100.

(2)

Conforming amendments

(A)

Limitation on wages per year taken into account

Section 51(b)(3) of such Code is amended to read as follows:

(3)

Limitation on wages per year taken into account

(A)

In general

The amount of the qualified first-year wages which may be taken into account with respect to any individual shall not exceed the applicable amount for the taxable year.

(B)

Applicable amount

For purposes of subparagraph (A), the term applicable amount means—

(i)

$24,000 in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(II),

(ii)

$14,000 in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(iv),

(iii)

$12,000 in the case of any individual who is a qualified veteran by reason of subsection (d)(3)(A)(ii)(I), and

(iv)

$6,000 in the case of any individual not described in clause (i), (ii), or (iii).

(B)

Qualified summer youth employees

Section 51(d)(7)(B)(ii) of such Code is amended to read as follows:

(ii)

the amount of the qualified first-year wages which may be taken into account with respect to such employee shall not exceed 50 percent of the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iv).

(C)

Special rules for agricultural labor and railway labor

(i)

In general

Section 51(i)(1) of such Code, as redesignated by subsection (b), is amended—

(I)

in subparagraph (A), by striking $6,000 and inserting the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iv), and

(II)

in subparagraph (B), by striking $500 and inserting 1/12 of the dollar amount in effect for the taxable year under subsection (b)(3)(B)(iv).

(ii)

Related conforming amendments

Section 51(e)(3) of such Code is amended by striking subparagraphs (A) and (B) and inserting the following new subparagraphs:

(A)

(B)

(d)

Effective dates

(1)

Extension

The amendment made by subsection (a) shall apply to individuals who begin work for the employer after December 31, 2025.

(2)

Enhancement; inflation adjustment

The amendments made by subsections (b) and (c) shall apply to individuals who begin work for the employer after December 31, 2026.

Reports

(a)

In general

The Secretary of the Treasury (or the Secretary’s delegate) shall, in consultation with the Administrator of the Small Business Administration, submit to the appropriate congressional committees a report for each of taxable years 2027 through 2030 on—

(1)

the number of small businesses that claim the increased work opportunity credit for qualified small businesses under section 51(f) of the Internal Revenue Code of 1986,

(2)

the employee retention rates and wage growth of such businesses,

(3)

the fiscal effect of the increased work opportunity credit for qualified small businesses under section 51(f) of such Code, and

(4)

opportunities to improve outreach to small businesses regarding the availability of the work opportunity credit under section 51 of such Code, including the increased credit for qualified small businesses under subsection (f) of such section.

(b)

Appropriate congressional committees

For purposes of this section, the term appropriate congressional committees means—

(1)

the Committee on Ways and Means of the House of Representatives,

(2)

the Committee on Small Business of the House of Representatives,

(3)

the Committee on Finance of the Senate, and

(4)

the Committee on Small Business and Entrepreneurship of the Senate.

Incentivizing Small Business Employee Retention Act of 2026

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