I 
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 Representa-
tives 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: 
VerDate Aug 31 2005 
22:16 Apr 13, 2006
Jkt 049200
PO 00000
Frm 00001
Fmt 6652
Sfmt 6201
E:\BILLS\H5146.IH
H5146
cchase on PROD1PC60 with BILLS
‘‘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 em-
ployer 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 re-
spect to a qualified employee employed by a qualified 
small employer, the amount of the job creation cred-
it determined under subsection (a) shall be zero if 
the qualified small employer does not maintain dur-
ing 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 em-
VerDate Aug 31 2005 
22:16 Apr 13, 2006
Jkt 049200
PO 00000
Frm 00002
Fmt 6652
Sfmt 6201
E:\BILLS\H5146.IH
H5146
cchase on PROD1PC60 with BILLS
ployer 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 em-
ployee’ means an employee of the qualified small em-
ployer— 
‘‘(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 em-
VerDate Aug 31 2005 
22:16 Apr 13, 2006
Jkt 049200
PO 00000
Frm 00003
Fmt 6652
Sfmt 6201
E:\BILLS\H5146.IH
H5146
cchase on PROD1PC60 with BILLS
ployee of such qualified small employer, except that 
such term shall not include the cash value of all re-
muneration (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 sec-
tion 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 (re-
lating 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 sec-
tions 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.’’. 
VerDate Aug 31 2005 
22:16 Apr 13, 2006
Jkt 049200
PO 00000
Frm 00004
Fmt 6652
Sfmt 6211
E:\BILLS\H5146.IH
H5146
cchase on PROD1PC60 with BILLS
(d) EFFECTIVE DATE.—The amendments made by 
this section shall apply to taxable years beginning after 
December 31, 2006. 
Æ 
VerDate Aug 31 2005 
22:16 Apr 13, 2006
Jkt 049200
PO 00000
Frm 00005
Fmt 6652
Sfmt 6301
E:\BILLS\H5146.IH
H5146
cchase on PROD1PC60 with BILLS