Job Creation Incentive Act of 2006

Job Creation Incentive Act of 2006 - Amends the Internal Revenue Code to allow certain small employers (i.e., employers of not more than 100 employees) a business-related tax credit for 5% of wages paid to non-replacement employees whose employment results in an increase in the employer's workforce.

[Congressional Bills 109th Congress]
[From the U.S. Government Publishing Office]
[H.R. 5146 Introduced in House (IH)]







109th CONGRESS
  2d Session
                                H. R. 5146

 To amend the Internal Revenue Code of 1986 to allow a credit against 
         tax to qualified small employers who create new jobs.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             April 6, 2006

 Mr. Knollenberg 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 allow a credit against 
         tax to qualified small employers who create new jobs.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Job Creation Incentive Act of 
2006''.

SEC. 2. JOB CREATION CREDIT FOR SMALL EMPLOYERS.

    (a) Allowance of Credit.--Subpart D of part IV of subchapter A of 
chapter 1 of the Internal Revenue Code of 1986 (relating to business 
related credits) is amended by inserting after section 45M the 
following new section:

``SEC. 45N. JOB CREATION CREDIT FOR SMALL EMPLOYERS.

    ``(a) General Rule.--For purposes of section 38, in the case of a 
qualified small employer, the amount of the job creation credit 
determined under this section for a taxable year is an amount equal to 
5 percent of the amount of qualified wages paid by the qualified small 
employer to a qualified employee during the taxable year.
    ``(b) Limitations.--
            ``(1) Maximum credit.--With respect to a qualified small 
        employer, the total amount of the job creation credit 
        determined under subsection (a) for any taxable year shall not 
        exceed 25 percent of the qualified small employer's regular tax 
        liability (as defined in section 26(b)).
            ``(2) Dollar limitation.--With respect to a qualified 
        employee, the amount of the job creation credit determined 
        under subsection (a) for a taxable year shall not exceed 
        $2,500.
            ``(3) Employment requirement.--With respect to a qualified 
        employee employed by a qualified small employer, the amount of 
        the job creation credit determined under subsection (a) shall 
        be zero if the qualified small employer does not maintain 
        during the first 180 days that the qualified employee is 
        employed a number of employees equal to or greater than the 
        number of employees employed by the employer on the first day 
        of the qualified employee's employment.
    ``(c) Definitions.--For purposes of this section, with respect to a 
taxable year--
            ``(1) Qualified small employer.--The term `qualified small 
        employer' means an employer who employs not more than 100 
        employees during the taxable year.
            ``(2) Qualified employee.--In the case of a qualified small 
        employer, the term `qualified employee' means an employee of 
        the qualified small employer--
                    ``(A) who is not hired to replace a former employee 
                of the qualified small employer,
                    ``(B) who completes the first 180 days and 960 
                hours of employment during such taxable year, and
                    ``(C) whose employment by the qualified small 
                employer results in an increase in the total number of 
                employees employed by the qualified small employer.
            ``(3) Qualified wages.--In the case of a qualified small 
        employer, the term `qualified wages' means any wages paid or 
        incurred by the qualified small employer for services performed 
        by an employee of such qualified small employer, except that 
        such term shall not include the cash value of all remuneration 
        (including benefits) paid in any medium other than cash.
    ``(d) Denial of Double Benefit.--No deduction shall be allowed 
under this chapter for any amount taken into account in determining the 
credit under this section.
    ``(e) Election not to Claim Credit.--This section shall not apply 
to a taxpayer for any taxable year if such taxpayer elects to have this 
section not apply for such taxable year.''.
    (b) Credit to Be Part of General Business Credit.--Subsection (b) 
of section 38 of such Code (relating to general business credit) is 
amended by striking ``and'' at the end of paragraph (29), by striking 
the period at the end of paragraph (30) and inserting ``, and'', and by 
adding at the end the following new paragraph:
            ``(31) the job creation credit determined under section 
        45N(a).''.
    (c) Conforming Amendment.--The table of sections for subpart D of 
part IV of subchapter A of chapter 1 of such Code is amended by 
inserting after the item relating to section 45M the following new 
item:

``Sec. 45N. Job creation credit for small employers.''.
    (d) Effective Date.--The amendments made by this section shall 
apply to taxable years beginning after December 31, 2006.
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