| 1 | 1 | | 89R11338 JBD-F |
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| 2 | 2 | | By: Martinez Fischer H.B. No. 2740 |
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| 3 | 3 | | |
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| 4 | 4 | | |
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| 5 | 5 | | |
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| 6 | 6 | | |
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| 7 | 7 | | A BILL TO BE ENTITLED |
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| 8 | 8 | | AN ACT |
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| 9 | 9 | | relating to a franchise tax credit for a taxable entity that |
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| 10 | 10 | | provides paid parental leave to the entity's employees. |
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| 11 | 11 | | BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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| 12 | 12 | | SECTION 1. Chapter 171, Tax Code, is amended by adding |
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| 13 | 13 | | Subchapter R to read as follows: |
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| 14 | 14 | | SUBCHAPTER R. TAX CREDIT FOR PAID PARENTAL LEAVE |
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| 15 | 15 | | Sec. 171.8001. DEFINITIONS. In this subchapter: |
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| 16 | 16 | | (1) "Employee" means an individual who performs |
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| 17 | 17 | | services for an employer for compensation under an oral or written |
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| 18 | 18 | | contract of hire, whether express or implied. The term does not |
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| 19 | 19 | | include an independent contractor. |
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| 20 | 20 | | (2) "Infant" means a child younger than one year of |
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| 21 | 21 | | age. |
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| 22 | 22 | | Sec. 171.8002. ENTITLEMENT TO CREDIT. A taxable entity is |
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| 23 | 23 | | entitled to a credit in the amount and under the conditions provided |
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| 24 | 24 | | by this subchapter against the tax imposed under this chapter. |
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| 25 | 25 | | Sec. 171.8003. QUALIFICATION. A taxable entity with |
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| 26 | 26 | | employees who are based in Texas during the period on which the |
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| 27 | 27 | | report is based qualifies for a credit under this subchapter if the |
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| 28 | 28 | | taxable entity provides paid parental leave to an employee |
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| 29 | 29 | | according to a policy adopted by the taxable entity under which an |
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| 30 | 30 | | employee is entitled to at least: |
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| 31 | 31 | | (1) eight weeks of paid leave following giving birth |
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| 32 | 32 | | to an infant; |
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| 33 | 33 | | (2) four weeks of paid leave following the birth of the |
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| 34 | 34 | | employee's infant if the employee did not give birth to the |
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| 35 | 35 | | employee's infant, including because the birth occurred through |
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| 36 | 36 | | surrogacy; and |
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| 37 | 37 | | (3) four weeks of paid leave following the adoption of |
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| 38 | 38 | | an infant by the employee or the employee's spouse or placement by |
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| 39 | 39 | | the Department of Family and Protective Services of an infant in |
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| 40 | 40 | | substitute care with the employee or the employee's spouse. |
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| 41 | 41 | | Sec. 171.8004. AMOUNT OF CREDIT. The amount of the credit |
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| 42 | 42 | | for a tax report is equal to the lesser of: |
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| 43 | 43 | | (1) the amount equal to the following percentages of |
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| 44 | 44 | | the actual costs incurred to pay wages to employees taking paid |
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| 45 | 45 | | parental leave during the accounting period on which the report is |
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| 46 | 46 | | based: |
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| 47 | 47 | | (A) if the entity employs 500 or fewer |
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| 48 | 48 | | Texas-based employees, 100 percent; |
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| 49 | 49 | | (B) if the entity employs more than 500 but fewer |
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| 50 | 50 | | than 1,500 Texas-based employees, 50 percent; or |
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| 51 | 51 | | (C) if the entity employs 1,500 or more |
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| 52 | 52 | | Texas-based employees, 10 percent; or |
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| 53 | 53 | | (2) the amount of franchise tax due for the report |
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| 54 | 54 | | after applying all other applicable credits. |
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| 55 | 55 | | Sec. 171.8005. APPLICATION FOR CREDIT. (a) A taxable |
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| 56 | 56 | | entity must apply for a credit under this subchapter on or with the |
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| 57 | 57 | | tax report for the period for which the credit is claimed. |
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| 58 | 58 | | (b) The comptroller shall promulgate a form for the |
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| 59 | 59 | | application for the credit. A taxable entity must use the form in |
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| 60 | 60 | | applying for the credit. |
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| 61 | 61 | | Sec. 171.8006. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A |
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| 62 | 62 | | taxable entity may claim a credit under this subchapter for a tax |
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| 63 | 63 | | report only in connection with paid parental leave provided to an |
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| 64 | 64 | | employee during the accounting period on which the report is based. |
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| 65 | 65 | | Sec. 171.8007. RULES. The comptroller shall adopt rules |
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| 66 | 66 | | regarding the manner by which a taxable entity may demonstrate the |
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| 67 | 67 | | actual costs incurred for purposes of Section 171.8004. |
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| 68 | 68 | | Sec. 171.8008. DATA COLLECTION AND PUBLICATION. (a) Not |
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| 69 | 69 | | later than December 31 of each year, the comptroller shall collect |
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| 70 | 70 | | and publish on the comptroller's Internet website the following |
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| 71 | 71 | | information: |
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| 72 | 72 | | (1) the total amount of credits claimed under this |
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| 73 | 73 | | subchapter for the preceding calendar year; and |
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| 74 | 74 | | (2) the total number of Texas-based employees with |
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| 75 | 75 | | respect to whom taxable entities provided paid parental leave for |
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| 76 | 76 | | which the entities claimed a credit under this subchapter in the |
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| 77 | 77 | | preceding calendar year. |
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| 78 | 78 | | (b) The comptroller shall provide notice to the legislature |
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| 79 | 79 | | of the publication of the data required by Subsection (a) on the |
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| 80 | 80 | | date the comptroller publishes that data. |
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| 81 | 81 | | SECTION 2. This Act applies only to a tax report originally |
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| 82 | 82 | | due on or after the effective date of this Act. |
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| 83 | 83 | | SECTION 3. This Act takes effect January 1, 2026. |
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