August 22, 2023

New Missouri Tax Credit Incentivizes Businesses to Hire Interns and Apprentices

Governor Michael L. Parson has signed new legislation establishing the Intern and Apprentice Recruitment Act (IARA). This law provides an income tax credit for taxpayers who hire an intern or apprentice who is paid at or beyond the minimum wage. It goes into effect on August 28, 2023 and is expected to help boost apprenticeship and internship opportunities in the state.

Key Takeaways:

  • For tax years beginning on or after January 1, 2024, a taxpayer will be allowed to claim a tax credit against the taxpayer’s state tax liability in an amount equal to $1,500 for each intern or apprentice hired at a pay rate equal to or greater than minimum wage
  • Tax credits will not be refundable and no tax credit claimed will be carried forward to any subsequent tax year 
  • Tax credits can’t be conveyed to another in any way, such as sales or assign   
  • The total amount of tax credits claimed by a taxpayer must not exceed $9,000 in any given tax year

How to Register for IARA

To apply for tax credits, you must submit your application to the Missouri Department of Economic Development (DED). Your application needs to include details about your participation in the qualified apprenticeship program or, if applicable, a copy of the official transcript for the intern you’re claiming. You are also required to provide any other information that the DED considers necessary. The DED will establish the procedure for claiming the tax credit and will certify eligible applicants to the Missouri Department of Revenue.

Requirements for the IARA Tax Credit

  • The number of interns or apprentices employed for the tax year that the credit is claimed exceeds the average number of interns or apprentices employed by the taxpayer over the previous three years
  • Interns must work a minimum of 60 hours per month for at least two consecutive months during the tax year the credit is claimed
  • A copy of each intern’s official transcript must be submitted with the claim for such tax credit.
  • Apprentices must comply with all federal requirements for a qualified apprenticeship, including completing a minimum of 2,000 hours of on-the-job training and 144 hours of required technical instruction in a calendar year
  • A copy of the qualified apprenticeship program certification must be submitted with the claim for such tax credit

Total Available Credit Amount

The total amount each taxpayer can claim in a single tax year is $9,000. The amount of credits for everyone in a given tax year is $1 million. If or when the tax credits exceed $1 million, then priority is given to the taxpayers who have been in business for less than five years, much like the recently reintroduced Missouri research and development (R&D) tax credit. If there are any remaining credits after that, they will be distributed based on the order they were claimed. The credit will expire on December 31, 2029.

Anders State and Local Tax advisors keeps a close eye on evolving legislation around tax credits and incentives. Learn more about our state and local tax services and associated fees by reaching out to Anders below.

Genesis Clay, tax intern, contributed to this article.

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