89R8661 RDS-D
By: Button H.B. No. 3011
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for taxable entities that make
certain employer child-care contributions.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter N-1 to read as follows:
SUBCHAPTER N-1. TAX CREDIT FOR CHILD-CARE CONTRIBUTION
Sec. 171.721. DEFINITION. In this subchapter, "child-care
contribution" means the dollar amount of a contribution made by a
taxable entity to an employee of the entity for use by the employee
to secure child care at a child-care facility or family home
licensed under Chapter 42, Human Resources Code, including a
licensed child-care facility operated by the entity. The term does
not include wages paid by the taxable entity to the employee or a
payment to the employee that is considered compensation for the
employee's service.
Sec. 171.722. 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. 171.723. AMOUNT OF CREDIT; LIMITATION. (a) Subject to
Subsections (b) and (c), the amount of the credit a taxable entity
may claim on a report is equal to the total amount of child-care
contributions paid by the entity during the period on which the
report is based. For purposes of computing the total amount of
child-care contributions paid by the taxable entity, a child-care
contribution in an amount that exceeds $3,600 for a child is
considered to be a child-care contribution in the amount of $3,600
for that child.
(b) The total credit claimed on a report, including the
amount of any carryforward under Section 171.724, 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 $25 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. 171.724. CARRYFORWARD. (a) If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.723(b), the entity may carry the unused credit forward for not
more than five 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 171.723(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. 171.725. 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.
(c) The comptroller may award a credit to a taxable entity
that applies for the credit under Subsection (a) of this section if
the taxable entity is eligible for the credit and the credit is
available under Section 171.723(c). The comptroller has discretion
in determining whether to grant or deny an application for a credit.
(d) The comptroller shall notify a taxable entity in writing
of the comptroller's decision to grant or deny the application
submitted under Subsection (a). If the comptroller denies a
taxable entity's application, the comptroller shall include in the
notice of denial the reasons for the comptroller's decision.
Sec. 171.726. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable
entity that makes a child-care contribution may sell or assign all
or part of the credit that may be claimed for that contribution to
one or more taxable entities, and any taxable entity to which all or
part of the credit is sold or assigned may sell or assign all or part
of the credit to another taxable entity. There is no limit on the
total number of transactions for the sale or assignment of all or
part of the total credit authorized under this subchapter.
(b) A taxable entity that sells or assigns a credit under
this section and the taxable entity to which the credit is sold or
assigned shall jointly submit written notice of the sale or
assignment to the comptroller not later than the 30th day after the
date of the sale or assignment. The notice must include:
(1) the date on which the credit was originally
established;
(2) the date of the sale or assignment;
(3) the amount of the credit sold or assigned and the
remaining period during which it may be used;
(4) the names, addresses, and federal tax
identification numbers of the taxable entity that sold or assigned
the credit or part of the credit and the taxable entity to which the
credit or part of the credit was sold or assigned; and
(5) the amount of the credit owned by the selling or
assigning taxable entity before the sale or assignment, and the
amount the selling or assigning taxable entity retained, if any,
after the sale or assignment.
(c) The sale or assignment of a credit in accordance with
this section does not extend the period for which a credit may be
carried forward.
(d) After a taxable entity claims a credit for a child-care
contribution under this subchapter, another entity may not use the
same expenditure as the basis for another credit.
Sec. 171.727. RULES. The comptroller shall adopt rules
necessary to implement and administer this subchapter.
SECTION 2. Subchapter N-1, Chapter 171, Tax Code, as added
by this Act, applies only to a report originally due on or after
January 1, 2026.
SECTION 3. This Act takes effect January 1, 2026.