89R8788 SRA-D
By: Alvarado S.B. No. 1803
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for taxable entities that
subsidize child-care costs of the entities' employees.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 171, Tax Code, is amended by adding
Subchapter W to read as follows:
SUBCHAPTER W. TAX CREDIT FOR CHILD-CARE SUBSIDY
Sec. 171.9261. DEFINITION. In this subchapter, "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 includes an independent contractor.
Sec. 171.9262. 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. 171.9263. QUALIFICATION. A taxable entity qualifies
for a credit under this subchapter if the taxable entity subsidizes
at least $2,400 of the annual cost incurred by each employee of the
entity to obtain child care during the employee's normal working
hours at:
(1) a child-care facility licensed under Chapter 42,
Human Resources Code, including a facility located on the
employer's premises; or
(2) a registered or listed family home under Chapter
42, Human Resources Code.
Sec. 171.9264. AMOUNT OF CREDIT; LIMITATION. (a) Subject
to Subsections (b) and (c), the amount of a taxable entity's credit
for a report is equal to the lesser of:
(1) the total amount of the subsidies described by
Section 171.9263 the entity paid during the period on which the
report is based; or
(2) four percent of the amount of the franchise tax due
for the report after applying all other applicable credits.
(b) The total credit claimed on a report, including the
amount of any carryforward under Section 171.9265, 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 $20 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. 171.9265. CARRYFORWARD. (a) If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.9264(b), the entity may carry the unused credit forward for not
more than two 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 171.9264(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. 171.9266. APPLICATION FOR CREDIT. A taxable entity
must:
(1) apply for a credit under this subchapter on or with
the report for which the credit is claimed and in the manner
prescribed by the comptroller; and
(2) include with the application any information
requested by the comptroller to determine the entity's eligibility
for and the amount of the credit.
Sec. 171.9267. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable
entity may not convey, assign, or transfer the credit allowed under
this subchapter to another taxable entity unless substantially all
of the assets of the taxable entity are conveyed, assigned, or
transferred in the same transaction.
Sec. 171.9268. RULES. The comptroller shall adopt rules
necessary to implement and administer this subchapter.
SECTION 2. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 3. This Act takes effect January 1, 2026.