| 1 | 1 | | 89R8788 SRA-D |
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| 2 | 2 | | By: Alvarado S.B. No. 1803 |
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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 taxable entities that |
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| 10 | 10 | | subsidize child-care costs of the entities' 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 W to read as follows: |
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| 14 | 14 | | SUBCHAPTER W. TAX CREDIT FOR CHILD-CARE SUBSIDY |
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| 15 | 15 | | Sec. 171.9261. DEFINITION. In this subchapter, "employee" |
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| 16 | 16 | | means an individual who performs services for an employer for |
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| 17 | 17 | | compensation under an oral or written contract of hire, whether |
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| 18 | 18 | | express or implied. The term includes an independent contractor. |
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| 19 | 19 | | Sec. 171.9262. ENTITLEMENT TO CREDIT. A taxable entity is |
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| 20 | 20 | | entitled to a credit in the amount and under the conditions provided |
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| 21 | 21 | | by this subchapter against the tax imposed under this chapter. |
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| 22 | 22 | | Sec. 171.9263. QUALIFICATION. A taxable entity qualifies |
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| 23 | 23 | | for a credit under this subchapter if the taxable entity subsidizes |
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| 24 | 24 | | at least $2,400 of the annual cost incurred by each employee of the |
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| 25 | 25 | | entity to obtain child care during the employee's normal working |
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| 26 | 26 | | hours at: |
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| 27 | 27 | | (1) a child-care facility licensed under Chapter 42, |
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| 28 | 28 | | Human Resources Code, including a facility located on the |
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| 29 | 29 | | employer's premises; or |
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| 30 | 30 | | (2) a registered or listed family home under Chapter |
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| 31 | 31 | | 42, Human Resources Code. |
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| 32 | 32 | | Sec. 171.9264. AMOUNT OF CREDIT; LIMITATION. (a) Subject |
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| 33 | 33 | | to Subsections (b) and (c), the amount of a taxable entity's credit |
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| 34 | 34 | | for a report is equal to the lesser of: |
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| 35 | 35 | | (1) the total amount of the subsidies described by |
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| 36 | 36 | | Section 171.9263 the entity paid during the period on which the |
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| 37 | 37 | | report is based; or |
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| 38 | 38 | | (2) four percent of the amount of the franchise tax due |
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| 39 | 39 | | for the report after applying all other applicable credits. |
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| 40 | 40 | | (b) The total credit claimed on a report, including the |
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| 41 | 41 | | amount of any carryforward under Section 171.9265, may not exceed |
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| 42 | 42 | | the amount of franchise tax due for the report after applying all |
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| 43 | 43 | | other applicable credits. |
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| 44 | 44 | | (c) The total amount of credits that may be awarded under |
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| 45 | 45 | | Subsection (a) in a state fiscal year may not exceed $20 million. |
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| 46 | 46 | | (d) The comptroller by rule shall prescribe procedures by |
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| 47 | 47 | | which the comptroller will allocate the amount of credits available |
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| 48 | 48 | | under Subsection (c). The procedures must provide that credits are |
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| 49 | 49 | | allocated to taxable entities that applied for the credit on a pro |
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| 50 | 50 | | rata basis. |
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| 51 | 51 | | Sec. 171.9265. CARRYFORWARD. (a) If a taxable entity is |
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| 52 | 52 | | eligible for a credit that exceeds the limitation under Section |
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| 53 | 53 | | 171.9264(b), the entity may carry the unused credit forward for not |
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| 54 | 54 | | more than two consecutive reports. |
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| 55 | 55 | | (b) A carryforward is considered the remaining portion of a |
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| 56 | 56 | | credit that cannot be claimed on a report because of the limitation |
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| 57 | 57 | | under Section 171.9264(b). |
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| 58 | 58 | | (c) Credits, including a carryforward, are considered to be |
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| 59 | 59 | | used in the following order: |
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| 60 | 60 | | (1) a carryforward under this section; and |
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| 61 | 61 | | (2) a credit for the period on which the report is |
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| 62 | 62 | | based. |
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| 63 | 63 | | Sec. 171.9266. APPLICATION FOR CREDIT. A taxable entity |
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| 64 | 64 | | must: |
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| 65 | 65 | | (1) apply for a credit under this subchapter on or with |
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| 66 | 66 | | the report for which the credit is claimed and in the manner |
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| 67 | 67 | | prescribed by the comptroller; and |
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| 68 | 68 | | (2) include with the application any information |
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| 69 | 69 | | requested by the comptroller to determine the entity's eligibility |
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| 70 | 70 | | for and the amount of the credit. |
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| 71 | 71 | | Sec. 171.9267. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable |
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| 72 | 72 | | entity may not convey, assign, or transfer the credit allowed under |
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| 73 | 73 | | this subchapter to another taxable entity unless substantially all |
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| 74 | 74 | | of the assets of the taxable entity are conveyed, assigned, or |
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| 75 | 75 | | transferred in the same transaction. |
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| 76 | 76 | | Sec. 171.9268. RULES. The comptroller shall adopt rules |
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| 77 | 77 | | necessary to implement and administer this subchapter. |
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| 78 | 78 | | SECTION 2. This Act applies only to a report originally due |
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| 79 | 79 | | on or after the effective date of this Act. |
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| 80 | 80 | | SECTION 3. This Act takes effect January 1, 2026. |
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