tax credit for child-care centers that add 25 percent capacity

The text as introduced · 1,024 words

89R1402 SRA-D

By: González of El Paso
H.B. No. 5273

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for certain child-care centers

that increase their capacity to care for children.

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

SECTION 1. It is the intent of the legislature that the

franchise tax credit proposed by this Act will incentivize

large-scale child-care providers to create additional capacity at

the providers' locations and therefore significantly increase the

availability of child care in this state.

SECTION 2. Chapter 171, Tax Code, is amended by adding

Subchapter P-1 to read as follows:

SUBCHAPTER P-1. TAX CREDIT FOR CHILD-CARE CENTERS THAT INCREASE

CAPACITY

Sec. 171.821. DEFINITION. In this subchapter, "licensed

child-care center" means a child-care center licensed, certified,

or registered by the Department of Family and Protective Services

to provide assessment, care, training, education, custody,

treatment, or supervision for a child who is not related by blood,

marriage, or adoption to the owner or operator of the center, for

all or part of the 24-hour day, whether or not the center is

operated for profit or charges for the services it offers.

Sec. 171.822. 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. 171.823. QUALIFICATION. A taxable entity qualifies

for a credit under this subchapter if the taxable entity operates

one or more licensed child-care centers, each of which is certified

as a provider in the Texas Rising Star Program.

Sec. 171.824. AMOUNT OF CREDIT; LIMITATIONS. (a) This

subsection applies to a taxable entity other than a taxable entity

described by Subsection (b). Subject to Subsections (c) and (d),

the amount of the credit a taxable entity to which this subsection

applies may claim on a report for each licensed child-care center

location operated by the entity is equal to:

(1) if the capacity of the licensed child-care center

is increased 25 percent or more but less than 50 percent during the

period on which the report is based, 50 percent of the additional

salary associated with the increase in the capacity of the licensed

child-care center paid by the entity during the period on which the

report is based;

(2) if the capacity of the licensed child-care center

is increased by 50 percent or more but less than 75 percent during

the period on which the report is based, 75 percent of the

additional salary associated with the increase in the capacity of

the licensed child-care center paid by the entity during the period

on which the report is based; or

(3) if the capacity of the licensed child-care center

is increased by 75 percent or more during the period on which the

report is based, 100 percent of the additional salary associated

with the increase in the capacity of the licensed child-care center

paid by the entity during the period on which the report is based.

(b) This subsection applies only to a taxable entity that is

a member of an affiliated group that files a combined report under

Section 171.1014. Subject to Subsections (c) and (d), the amount of

the credit a taxable entity to which this subsection applies may

claim on a report is equal to:

(1) if the capacity of at least 50 percent of the

licensed child-care center locations operated by all members of the

taxable entity's combined group is increased by 25 percent or more

but less than 50 percent during the period on which the report is

based, 50 percent of the additional salary associated with the

increase in capacity at those locations paid during the period on

which the report is based;

(2) if the capacity of at least 50 percent of the

licensed child-care center locations operated by all members of the

taxable entity's combined group is increased by 50 percent or more

but less than 75 percent during the period on which the report is

based, 75 percent of the additional salary associated with the

increase in capacity at those locations paid during the period on

which the report is based; or

(3) if the capacity of at least 50 percent of the

licensed child-care center locations operated by all members of the

taxable entity's combined group is increased by 75 percent or more

during the period on which the report is based, 100 percent of the

additional salary associated with the increase in capacity at those

locations paid during the period on which the report is based.

(c) A taxable entity may continue to claim a credit in the

amount the entity claims on the first report on which the entity

claims a credit under this subchapter on the two reports due

subsequent to that first report if the entity maintains the

increase in child-care capacity that forms the basis of the credit

claimed on the first report during the period covered by each of the

two subsequent reports.

(d) The total amount of credit claimed by a taxable entity

on a report may not exceed the amount of franchise tax due for the

report after the application of any other applicable credits.

Sec. 171.825. APPLICATION FOR CREDIT. (a) A taxable entity

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

for the period for which the credit is claimed.

(b) A taxable entity must apply for the credit in the manner

prescribed by the comptroller and include with the application any

information requested by the comptroller to determine whether the

entity is eligible for the credit under this subchapter.

Sec. 171.826. ASSIGNMENT PROHIBITED; EXEMPTION. A taxable

entity may not convey, assign, or transfer a credit under this

subchapter to another entity unless substantially all of the assets

of the taxable entity are conveyed, assigned, or transferred in the

same transaction.

Sec. 171.827. RULES. The comptroller shall adopt rules

necessary to implement and administer this subchapter.

SECTION 3. This Act applies only to a report originally due

on or after the effective date of this Act.

SECTION 4. This Act takes effect January 1, 2026.