franchise tax credit for $2,400 a year in child care

The text as introduced · 622 words

89R8788 SRA-D

By: Alvarado
S.B. No. 1803

A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for taxable entities that

subsidize child-care costs of the entities' employees.

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

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

Subchapter W to read as follows:

SUBCHAPTER W. TAX CREDIT FOR CHILD-CARE SUBSIDY

Sec. 171.9261. DEFINITION. In this subchapter, "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 includes an independent contractor.

Sec. 171.9262. 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. 171.9263. QUALIFICATION. A taxable entity qualifies

for a credit under this subchapter if the taxable entity subsidizes

at least $2,400 of the annual cost incurred by each employee of the

entity to obtain child care during the employee's normal working

hours at:

(1) a child-care facility licensed under Chapter 42,

Human Resources Code, including a facility located on the

employer's premises; or

(2) a registered or listed family home under Chapter

42, Human Resources Code.

Sec. 171.9264. AMOUNT OF CREDIT; LIMITATION. (a) Subject

to Subsections (b) and (c), the amount of a taxable entity's credit

for a report is equal to the lesser of:

(1) the total amount of the subsidies described by

Section 171.9263 the entity paid during the period on which the

report is based; or

(2) four percent of the amount of the franchise tax due

for the report after applying all other applicable credits.

(b) The total credit claimed on a report, including the

amount of any carryforward under Section 171.9265, may not exceed

the amount of franchise tax due for the report after applying all

other applicable credits.

(c) The total amount of credits that may be awarded under

Subsection (a) in a state fiscal year may not exceed $20 million.

(d) The comptroller by rule shall prescribe procedures by

which the comptroller will allocate the amount of credits available

under Subsection (c). The procedures must provide that credits are

allocated to taxable entities that applied for the credit on a pro

rata basis.

Sec. 171.9265. CARRYFORWARD. (a) If a taxable entity is

eligible for a credit that exceeds the limitation under Section

171.9264(b), the entity may carry the unused credit forward for not

more than two consecutive reports.

(b) A carryforward is considered the remaining portion of a

credit that cannot be claimed on a report because of the limitation

under Section 171.9264(b).

(c) Credits, including a carryforward, are considered to be

used in the following order:

(1) a carryforward under this section; and

(2) a credit for the period on which the report is

based.

Sec. 171.9266. APPLICATION FOR CREDIT. A taxable entity

must:

(1) apply for a credit under this subchapter on or with

the report for which the credit is claimed and in the manner

prescribed by the comptroller; and

(2) include with the application any information

requested by the comptroller to determine the entity's eligibility

for and the amount of the credit.

Sec. 171.9267. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable

entity may not convey, assign, or transfer the credit allowed under

this subchapter to another taxable entity unless substantially all

of the assets of the taxable entity are conveyed, assigned, or

transferred in the same transaction.

Sec. 171.9268. RULES. The comptroller shall adopt rules

necessary to implement and administer this subchapter.

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

on or after the effective date of this Act.

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