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Governments can incentivize businesses to take a more active role in investing in worker training through the establishment of a Worker Training Tax Credit. Firms could create a base expenditure level for training expenses, and the credit would be a percentage of the difference between the current year qualified training expenditure and the base expenditure. The credit would only cover training for non-highly compensated workers (less than $120,000 per year), the standard currently used in the Internal Revenue Code.
Several states provide businesses with tax incentives to encourage training investments, including Connecticut, Georgia, Kentucky, Mississippi, Rhode Island, and Virginia. These incentives range between 5 percent and 50 percent of eligible training expenses.
