Bill Would Provide Tax Credit For Employee Service Activities

A bill introduced last week would amend the Internal Revenue Code (IRC) to provide a tax credit for qualified donations of employee services. The Incentive to Serve Tax Act (H.R. 1644) would provide employers with a qualified employee service donation credit equal to 25 percent of the qualified wages paid to the employee performing the services.

To be eligible for this credit, the amount of wages for credit purposes cannot exceed $100,000 per employee per year, and cannot be combined with certain other tax credits. Additionally, the employee must perform at least 160 hours of qualified service for which he or she is fully compensated. For purposes of this tax credit, “qualified services” means the following:

  • the provision of eligible direct services to recipients or beneficiaries of charitable organizations and community agencies,
  • the recruitment and coordination of activities of volunteers providing such eligible direct services, or
  • the building-up of the capacity of such organizations and agencies to provide such eligible direct services.

An “eligible direct service” is a service that does one or more of the following:

  • Improves the quality of education in public schools for economically disadvantaged students.
  • Expands and improves access to health care.
  • Improves and conserves energy and natural resources. 
  • Improves economic opportunities for economically disadvantaged individuals.
  • Improves disaster preparedness and response.

The employee must consent to performing these services. Additionally, in order to receive this business tax credit, the employer must submit information or certification verifying that such activities were performed.

This bill has been referred to the House Committees on Ways and Means and Education and Labor.

Information contained in this publication is intended for informational purposes only and does not constitute legal advice or opinion, nor is it a substitute for the professional judgment of an attorney.