Texas 2025 - 89th Regular

Texas Senate Bill SB1097 Compare Versions

Only one version of the bill is available at this time.

Old	New	Differences
1	1	89R9677 CJC-D
2	2	By: Hughes S.B. No. 1097
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7	7	A BILL TO BE ENTITLED
8	8	AN ACT
9	9	relating to a franchise tax credit for taxable entities that make
10	10	contributions to employees' Texas 529 plans.
11	11	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
12	12	SECTION 1. Chapter 171, Tax Code, is amended by adding
13	13	Subchapter U to read as follows:
14	14	SUBCHAPTER U. TAX CREDIT FOR TEXAS 529 PLAN CONTRIBUTION
15	15	Sec. 171.9231. DEFINITIONS. In this subchapter:
16	16	(1) "Texas 529 plan" means a qualified tuition program
17	17	under Section 529, Internal Revenue Code of 1986, as amended,
18	18	administered by the Prepaid Higher Education Tuition Board under
19	19	Chapter 54, Education Code.
20	20	(2) "Texas 529 plan contribution" means the dollar
21	21	amount of a contribution made by a taxable entity to a Texas 529
22	22	plan owned by an employee of the entity. The term does not include
23	23	salary or wages paid by the taxable entity to the employee for the
24	24	employee's service.
25	25	Sec. 171.9232. ENTITLEMENT TO CREDIT. A taxable entity is
26	26	entitled to a credit in the amount and under the conditions provided
27	27	by this subchapter against the tax imposed under this chapter.
28	28	Sec. 171.9233. QUALIFICATION. A taxable entity qualifies
29	29	for a credit under this subchapter if the taxable entity
30	30	contributes to at least one Texas 529 plan of each employee of the
31	31	taxable entity who owns one or more Texas 529 plans and agrees to
32	32	allow the entity to contribute to the plan.
33	33	Sec. 171.9234. AMOUNT OF CREDIT; LIMITATION. (a) Subject
34	34	to Subsection (b), the amount of the credit a taxable entity may
35	35	claim on a report is equal to 25 percent of the total amount of Texas
36	36	529 plan contributions made by the entity during the period on which
37	37	the report is based.
38	38	(b) The total credit claimed on a report, including the
39	39	amount of any carryforward under Section 171.9235, may not exceed
40	40	the amount of franchise tax due for the report after applying all
41	41	other applicable credits.
42	42	Sec. 171.9235. CARRYFORWARD. (a) If a taxable entity is
43	43	eligible for a credit that exceeds the limitation under Section
44	44	171.9234(b), the entity may carry the unused credit forward for not
45	45	more than five consecutive reports.
46	46	(b) A carryforward is considered the remaining portion of a
47	47	credit that cannot be claimed on a report because of the limitation
48	48	under Section 171.9234(b).
49	49	(c) Credits, including a carryforward, are considered to be
50	50	used in the following order:
51	51	(1) a carryforward under this section; and
52	52	(2) a credit for the period on which the report is
53	53	based.
54	54	Sec. 171.9236. APPLICATION FOR CREDIT. (a) A taxable
55	55	entity must apply for a credit under this subchapter on or with the
56	56	report for the period for which the credit is claimed.
57	57	(b) A taxable entity must apply for the credit in the manner
58	58	prescribed by the comptroller and include with the application any
59	59	information requested by the comptroller to determine whether the
60	60	entity is eligible for the credit under this subchapter.
61	61	Sec. 171.9237. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable
62	62	entity that makes a Texas 529 plan contribution may sell or assign
63	63	all or part of the credit that may be claimed for that contribution
64	64	to one or more taxable entities, and any taxable entity to which all
65	65	or part of the credit is sold or assigned may sell or assign all or
66	66	part of the credit to another taxable entity. There is no limit on
67	67	the total number of transactions for the sale or assignment of all
68	68	or part of the total credit authorized under this subchapter.
69	69	(b) A taxable entity that sells or assigns a credit under
70	70	this section and the taxable entity to which the credit is sold or
71	71	assigned shall jointly submit written notice of the sale or
72	72	assignment to the comptroller not later than the 30th day after the
73	73	date of the sale or assignment. The notice must include:
74	74	(1) the date on which the credit was originally
75	75	established;
76	76	(2) the date of the sale or assignment;
77	77	(3) the amount of the credit sold or assigned and the
78	78	remaining period during which it may be used;
79	79	(4) the names, addresses, and federal tax
80	80	identification numbers of the taxable entity that sold or assigned
81	81	the credit or part of the credit and the taxable entity to which the
82	82	credit or part of the credit was sold or assigned; and
83	83	(5) the amount of the credit owned by the selling or
84	84	assigning taxable entity before the sale or assignment, and the
85	85	amount the selling or assigning taxable entity retained, if any,
86	86	after the sale or assignment.
87	87	(c) The sale or assignment of a credit in accordance with
88	88	this section does not extend the period for which a credit may be
89	89	carried forward.
90	90	(d) After a taxable entity claims a credit for a Texas 529
91	91	plan contribution under this subchapter, another entity may not use
92	92	the same expenditure as the basis for another credit.
93	93	Sec. 171.9238. RULES. The comptroller shall adopt rules
94	94	necessary to implement and administer this subchapter.
95	95	SECTION 2. Subchapter U, Chapter 171, Tax Code, as added by
96	96	this Act, applies only to a report originally due on or after
97	97	January 1, 2026.
98	98	SECTION 3. This Act takes effect January 1, 2026.