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.