Texas House Bill HB5273

Texas 2025 - 89th Regular

• Filed: 3/14/25

Caption

Relating to a franchise tax credit for certain child-care centers that increase their capacity to care for children.

Impact

The bill proposes amendments to Chapter 171 of the Tax Code, creating a new subchapter specifically outlining the tax credit provisions. Entities operating licensed child-care centers that qualify under the Texas Rising Star Program will benefit from the credit, calculated based on the percentage increase in capacity. The structured incentives encourage these centers to hire additional staff, as the credit amount is correlated with salary expenses associated with the expansion of capacity.

Summary

House Bill 5273 aims to provide a franchise tax credit to incentivize licensed child-care centers in Texas to increase their child care capacity. By doing so, the bill seeks to address the growing demand for child care services across the state, allowing centers to provide more services to families in need. The legislative intent is to bolster the availability of child care, thereby supporting working families and early childhood development programs.

Contention

While the bill has garnered support among lawmakers advocating for early childhood education, there may be concerns regarding its long-term fiscal implications on state tax revenues. Critics could raise questions about the sustainability of financing these tax credits and the potential for unintended consequences, such as over-reliance on state incentives for business growth. Debates may also ensue over the assessment criteria to ensure that centers are genuinely expanding their capacity versus leveraging the tax credit without significant operational improvements.

Texas Constitutional Statutes Affected

Tax Code

• Chapter 171. Franchise Tax
  • Section: New Section