franchise tax credit for paid parental leave

The text as introduced · 666 words

89R11338 JBD-F

By: Martinez Fischer
H.B. No. 2740

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for a taxable entity that

provides paid parental leave to the entity's employees.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Chapter 171, Tax Code, is amended by adding

Subchapter R to read as follows:

SUBCHAPTER R. TAX CREDIT FOR PAID PARENTAL LEAVE

Sec. 171.8001. DEFINITIONS. In this subchapter:

(1) "Employee" means an individual who performs

services for an employer for compensation under an oral or written

contract of hire, whether express or implied. The term does not

include an independent contractor.

(2) "Infant" means a child younger than one year of

age.

Sec. 171.8002. ENTITLEMENT TO CREDIT. A taxable entity is

entitled to a credit in the amount and under the conditions provided

by this subchapter against the tax imposed under this chapter.

Sec. 171.8003. QUALIFICATION. A taxable entity with

employees who are based in Texas during the period on which the

report is based qualifies for a credit under this subchapter if the

taxable entity provides paid parental leave to an employee

according to a policy adopted by the taxable entity under which an

employee is entitled to at least:

(1) eight weeks of paid leave following giving birth

to an infant;

(2) four weeks of paid leave following the birth of the

employee's infant if the employee did not give birth to the

employee's infant, including because the birth occurred through

surrogacy; and

(3) four weeks of paid leave following the adoption of

an infant by the employee or the employee's spouse or placement by

the Department of Family and Protective Services of an infant in

substitute care with the employee or the employee's spouse.

Sec. 171.8004. AMOUNT OF CREDIT. The amount of the credit

for a tax report is equal to the lesser of:

(1) the amount equal to the following percentages of

the actual costs incurred to pay wages to employees taking paid

parental leave during the accounting period on which the report is

based:

(A) if the entity employs 500 or fewer

Texas-based employees, 100 percent;

(B) if the entity employs more than 500 but fewer

than 1,500 Texas-based employees, 50 percent; or

(C) if the entity employs 1,500 or more

Texas-based employees, 10 percent; or

(2) the amount of franchise tax due for the report

after applying all other applicable credits.

Sec. 171.8005. APPLICATION FOR CREDIT. (a) A taxable

entity must apply for a credit under this subchapter on or with the

tax report for the period for which the credit is claimed.

(b) The comptroller shall promulgate a form for the

application for the credit. A taxable entity must use the form in

applying for the credit.

Sec. 171.8006. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A

taxable entity may claim a credit under this subchapter for a tax

report only in connection with paid parental leave provided to an

employee during the accounting period on which the report is based.

Sec. 171.8007. RULES. The comptroller shall adopt rules

regarding the manner by which a taxable entity may demonstrate the

actual costs incurred for purposes of Section 171.8004.

Sec. 171.8008. DATA COLLECTION AND PUBLICATION. (a) Not

later than December 31 of each year, the comptroller shall collect

and publish on the comptroller's Internet website the following

information:

(1) the total amount of credits claimed under this

subchapter for the preceding calendar year; and

(2) the total number of Texas-based employees with

respect to whom taxable entities provided paid parental leave for

which the entities claimed a credit under this subchapter in the

preceding calendar year.

(b) The comptroller shall provide notice to the legislature

of the publication of the data required by Subsection (a) on the

date the comptroller publishes that data.

SECTION 2. This Act applies only to a tax report originally

due on or after the effective date of this Act.

SECTION 3. This Act takes effect January 1, 2026.