Labor Department Skills-Training Grants Face Aug. 17 Deadline

State workforce agencies have until 11:59 p.m. Eastern on August 17, 2026—two days from August 15—to apply for approximately $40 million in a second round of federal grants supporting employer-led skills training.

The U.S. Department of Labor issued the opportunity through Training and Employment Guidance Letter 02-25, Change 1, dated July 7, 2026. The federal grant listing was posted July 8. Applications must be submitted electronically through Grants.gov; late, emailed, mailed or faxed applications will not be accepted.

The grants are designed to help states create training partnerships with employers in high-demand and emerging industries. At least $5 million of the available funding must support shipbuilding training. Other priority areas include occupations tied to artificial-intelligence infrastructure, advanced manufacturing, nuclear energy, domestic mineral production, aerospace and information technology, including AI.

States, not employers, must apply

Only state workforce agencies may serve as lead applicants. Individual workers, employers, colleges and training providers cannot apply directly to the Labor Department as lead applicants under this opportunity.

The Labor Department will consider only one application from each state or territory. A state workforce agency that received a Round 1 Industry-Driven Skills Training Fund grant is ineligible for Round 2. Agencies also may be disqualified if an active grant has been formally designated as “at-risk” by the department’s regional office or if the agency is subject to a drawdown restriction on another Labor Department grant.

The department anticipates five to 13 awards, with individual requests ranging from $3 million to $8 million. The federal grant listing displays 10 expected awards, but that number is an estimate rather than a final award count.

How employers and workers fit in

Employers would participate through partnerships organized by the state grantee. A participating employer must operate in the grantee state and targeted service area, conduct business in a target industry identified by the state, commit to recruiting or training new hires or upskilling current employees, identify training needs and report training and employment outcomes.

Employers also must work with the grantee to develop a training strategy, identify the total training cost and determine how instruction will be delivered. Eligible activities can include classroom or virtual instruction, customized training and employer-provided work-based learning, including on-the-job training.

Eligible participants may be newly hired or incumbent workers. They must be at least 17 years old and not currently enrolled in secondary school.

Reimbursement depends on completion and retention

States may reimburse participating employers for up to 80% of a participant’s actual allowable training cost. The 80% figure is a program ceiling, not an automatic payment. Each state must establish its own reimbursement structure, per-employee ceilings and maximum dollar amounts, and apply those rules consistently to its employer partners.

Reimbursement is divided between two performance-based milestones: completion of the training and retention with the same employer for six months after training completion. The six-month measure is an outcome requirement for payment and reporting; it is not a guarantee of permanent employment.

States may design tiered reimbursement rates or bonus payments within the 80% ceiling to encourage training that leads to an industry-recognized postsecondary credential, training for newly hired workers or participation by small businesses with fewer than 100 full-time employees. Those incentives are optional and depend on the design approved for each state’s program.

The credentials referenced in the guidance are recognized postsecondary credentials under the Labor Department’s workforce-accountability framework. They are not a single nationwide list of licenses or professional certifications.

Most grant money must reach employer training

At least 90% of each grant must be used to reimburse employers for allowable training costs. Up to 10% may cover program operations and implementation, including personnel, indirect costs, outreach, software, hardware and data management or security.

Training that began or was completed before an employer was approved to participate in the state’s program cannot be reimbursed.

What happens after August 17

The approximately $40 million total includes $30 million from the fiscal 2025 appropriation. The Labor Department says up to approximately $10 million from fiscal 2026 funds could also be added if enough qualifying applications are received.

The grants have an anticipated October 1, 2026, start date and a 45-month performance period. Successful applicants would first enter a 60-day planning phase to finalize the project design, budget, Statement of Work and performance targets with the department.

Employers interested in participating should contact their state workforce agency, workforce board or relevant state economic-development office rather than applying directly to Washington. Workers should watch for state announcements after awards are made because the federal opportunity is not an open individual training application.

Sources

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