By: Paxton, et al. S.B. No. 2018
(In the Senate - Filed March 6, 2025; March 17, 2025, read
first time and referred to Committee on Finance; April 9, 2025,
reported favorably by the following vote: Yeas 13, Nays 0;
April 9, 2025, sent to printer.)
Click here to see the committee vote
A BILL TO BE ENTITLED
AN ACT
relating to the strong families credit against certain taxes for
entities that contribute to certain organizations.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 201, Alcoholic Beverage Code, is amended
by adding Subchapter D to read as follows:
SUBCHAPTER D. STRONG FAMILIES TAX CREDIT
Sec. 201.101. DEFINITIONS. In this subchapter:
(1) "Designated contribution," "eligible
organization," and "strong families credit" have the meanings
assigned by Section 171.801, Tax Code.
(2) "Taxpayer" means a person who pays a tax under this
chapter.
Sec. 201.102. ELIGIBILITY. A taxpayer that makes a
designated contribution that meets the requirements of Subchapter
P, Chapter 171, Tax Code, is entitled to apply for a strong families
credit in the amount and under the conditions provided by this
subchapter against taxes paid under this chapter.
Sec. 201.103. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
to Subsections (b) and (c), the amount of a taxpayer's credit for a
state fiscal year is equal to the lesser of:
(1) the amount of designated contributions made to
eligible organizations during the state fiscal year; or
(2) the amount of taxes paid by the taxpayer under this
chapter during the state fiscal year.
(b) The maximum amount of strong families credits that may
be awarded is the amount provided by Section 171.805(c), Tax Code.
(c) The maximum amount of designated contributions a
taxpayer may make to all eligible organizations in a state fiscal
year is the amount provided by Section 171.805(b), Tax Code.
(d) The comptroller shall allocate strong families credits
as provided by Section 171.805(d), Tax Code.
Sec. 201.104. APPLICATION. (a) A taxpayer must apply to
claim a strong families credit against a tax imposed under this
chapter.
(b) A taxpayer 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
taxpayer is eligible for the credit under this subchapter.
(c) The comptroller may award a credit to a taxpayer who
applies for the credit under Subsection (a) if the taxpayer is
eligible for the credit and the credit is available under Section
171.805(c), Tax Code.
(d) The comptroller shall notify a taxpayer in writing of
the comptroller's decision to grant or deny the application under
Subsection (a). If the comptroller denies a taxpayer's
application, the comptroller shall include in the notice of denial
the reasons for the comptroller's decision.
Sec. 201.105. RULES. The comptroller may adopt rules and
procedures necessary to implement, administer, and enforce this
subchapter.
Sec. 201.106. EXPIRATION. (a) This subchapter expires
January 1, 2028.
(b) The expiration of this subchapter does not affect
credits for which a taxpayer is eligible after the date this
subchapter expires based on designated contributions made before
that date.
SECTION 2. Subtitle B, Title 3, Insurance Code, is amended
by adding Chapter 230 to read as follows:
CHAPTER 230. STRONG FAMILIES TAX CREDIT
Sec. 230.001. DEFINITIONS. In this chapter:
(1) "Designated contribution," "eligible
organization," and "strong families credit" have the meanings
assigned by Section 171.801, Tax Code.
(2) "State insurance tax liability" means any tax
liability incurred by an entity under Chapters 221 through 226 or
Chapter 281.
Sec. 230.002. ELIGIBILITY. An entity that makes a
designated contribution that meets the requirements of Subchapter
P, Chapter 171, Tax Code, is entitled to apply for a strong families
credit in the amount and under the conditions provided by this
chapter against the entity's state insurance tax liability.
Sec. 230.003. AMOUNT OF CREDIT; LIMITATION ON TOTAL
CREDITS. (a) Subject to Subsections (b) and (c), the amount of an
entity's credit for a report is equal to the lesser of:
(1) the amount of designated contributions made to an
eligible organization during the year covered by the report; or
(2) the amount of the entity's state insurance tax
liability for the year covered by the report after applying all
other applicable credits.
(b) The maximum amount of strong families credits that may
be awarded is the amount provided by Section 171.805(c), Tax Code.
(c) The maximum amount of designated contributions an
entity may make to all eligible organizations in a state fiscal year
is the amount provided by Section 171.805(b), Tax Code.
(d) The comptroller shall allocate strong families credits
as provided by Section 171.805(d), Tax Code.
Sec. 230.004. APPLICATION FOR CREDIT. (a) An entity must
apply to claim a strong families credit under this chapter on or
with the report covering the year in which the designated
contribution was made.
(b) An 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 chapter.
(c) The comptroller may award a credit to an entity that
applies for the credit under Subsection (a) if the entity is
eligible for the credit and the credit is available under Section
171.805(c), Tax Code.
Sec. 230.005. ASSIGNMENT PROHIBITED; EXCEPTION. An entity
may not convey, assign, or transfer a strong families credit to
another entity unless substantially all of the assets of the entity
are conveyed, assigned, or transferred in the same transaction.
Sec. 230.006. RULES. The comptroller may adopt rules and
procedures necessary to implement, administer, and enforce this
chapter.
Sec. 230.007. EXPIRATION. (a) This chapter expires
January 1, 2028.
(b) The expiration of this chapter does not affect credits
for which an entity is eligible after the date this chapter expires
based on designated contributions made before that date.
SECTION 3. Chapter 171, Tax Code, is amended by adding
Subchapter P to read as follows:
SUBCHAPTER P. STRONG FAMILIES TAX CREDIT
Sec. 171.801. DEFINITIONS. In this subchapter:
(1) "At-risk family" has the meaning assigned by
Section 137.002, Human Resources Code.
(2) "Commission" means the Health and Human Services
Commission.
(3) "Designated contribution" means a monetary
contribution to an eligible organization that the contributor
designates at the time of contribution as being made for the purpose
of the strong families credit.
(4) "Eligible organization" means an organization
that is certified by the commission as an eligible organization
under this subchapter.
(5) "Strong families credit" means the tax credit
established under this subchapter that may be claimed under:
(A) Subchapter D, Chapter 201, Alcoholic
Beverage Code;
(B) Chapter 230, Insurance Code;
(C) this subchapter; or
(D) Chapter 203.
Sec. 171.802. ELIGIBILITY FOR CREDIT. A taxable entity
that makes a designated contribution that meets the requirements of
this subchapter is eligible to apply for a strong families credit in
the amount and under the conditions provided by this subchapter
against the tax imposed under this chapter.
Sec. 171.803. QUALIFICATIONS FOR ELIGIBLE ORGANIZATION;
CERTIFICATION OF ELIGIBILITY. (a) An organization may apply to the
commission for certification as an eligible organization under this
subchapter if the organization:
(1) is exempt from federal income taxation under
Section 501(a), Internal Revenue Code of 1986, as an organization
described by Section 501(c)(3) of that code;
(2) is authorized to transact business in this state;
(3) has provided the following in this state for at
least three years preceding the organization's initial application
for certification as an eligible organization:
(A) comprehensive case management services for
at-risk families based on an assessment of family strengths and
needs, including assisting families in achieving self-sufficiency,
stability, and encouraging workforce participation; and
(B) services and resources to assist fathers in
learning and improving parenting skills and being more engaged in
their children's lives through in-school programs and online
resources;
(4) does not directly or indirectly provide abortion
services, or offer information related to abortion services; and
(5) has not received, either directly or indirectly
through a contractor, more than 50 percent of its total annual
revenue from this state or a political subdivision of this state in
the preceding state fiscal year.
(b) Services and resources described by Subsection (a)(3)
must be implemented with a continuous quality improvement process
and evaluated based on outcomes.
(c) An organization must reapply for certification as an
eligible organization each calendar year by submitting to the
commission a signed application form containing:
(1) a description of the qualifying services and
resources provided by the organization;
(2) the total number of individuals served through the
services and resources described by Subdivision (1) during the
previous calendar year and the number of those individuals served
and provided with resources that year using designated
contributions;
(3) outcomes for services and resources described by
Subdivision (1);
(4) the organization's financial information;
(5) the organization's contact information;
(6) a statement, signed under penalty of perjury by an
officer of the organization, that the organization meets all
criteria to qualify as an eligible organization, has fulfilled the
requirements for the previous calendar year, and intends to fulfill
the requirements for the next calendar year; and
(7) any other documentation requested by the
commission to verify eligibility or compliance with this section.
(d) The commission shall:
(1) issue a certificate of eligibility to an eligible
applicant stating that the organization meets the qualifications of
an eligible organization;
(2) revoke an organization's certificate of
eligibility if the organization violates this subchapter or fails
to maintain the eligibility requirements of this subchapter;
(3) publish information about the strong families
credit on the commission's Internet website, including:
(A) the requirements and process for an
organization to be certified as an eligible organization; and
(B) a list of organizations currently certified
as eligible organizations; and
(4) require the return of designated contributions
made to an organization that has had the organization's
certification as an eligible organization revoked or that otherwise
fails to comply with the requirements of this subchapter.
(e) An organization that is required to return
contributions under Subsection (d)(4) is ineligible for
certification as an eligible organization.
(f) An organization whose certification as an eligible
organization lapses or is revoked for a reason other than the reason
described by Subsection (d)(4) may reapply for certification as an
eligible organization.
Sec. 171.804. DUTIES OF ELIGIBLE ORGANIZATION. (a) An
eligible organization shall:
(1) conduct a local, state, and national criminal
background check for all individuals working directly with children
in a program funded by designated contributions that includes the
use of:
(A) a commercial multistate and
multijurisdiction criminal records locator or other similar
commercial nationwide database; and
(B) the national sex offender registry database
maintained by the United States Department of Justice or a
successor agency;
(2) spend all designated contributions, other than the
amount described by Subdivision (3), to provide services or
resources for residents of this state;
(3) spend no more than five percent of the total dollar
amount of designated contributions on administrative expenses; and
(4) annually submit to the comptroller:
(A) the report of an audit of the eligible
organization conducted by an independent certified public
accountant in accordance with generally accepted auditing
principles completed not later than the 180th day after the end of
the eligible organization's fiscal year; and
(B) a copy of the eligible organization's most
recent Form 990 filed with the Internal Revenue Service.
(b) On receipt of a designated contribution, an eligible
organization shall provide the entity making the contribution with
a certificate of contribution that includes:
(1) the entity's name;
(2) the eligible organization's name;
(3) the entity's federal employer identification
number, if applicable;
(4) the amount of the designated contribution; and
(5) the date the designated contribution was made.
Sec. 171.805. AMOUNT OF CREDIT; LIMITATION ON TOTAL
CREDITS. (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 amount of designated contributions made to
eligible organizations during the period covered by the report; or
(2) the amount of franchise tax due for the report
after applying all other applicable credits.
(b) A taxable entity may not apply for a credit for a report
in connection with more than $1 million in designated
contributions.
(c) The total amount of strong families credits awarded may
not exceed $10 million.
(d) The comptroller by rule shall prescribe procedures by
which the comptroller will allocate strong families credits. The
procedures must provide that any credits are allocated to entities
that apply on a first-come, first-served basis.
Sec. 171.806. CARRYFORWARD. (a) If a taxable entity is
eligible for a credit that exceeds the limitation under Section
171.805(a), 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 171.805(a).
Sec. 171.807. APPLICATION FOR CREDIT. (a) A taxable entity
must apply to claim a strong families credit under this subchapter
on or with the report covering the period in which the designated
contribution was made.
(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) if the taxable
entity is eligible for the credit and the credit is available under
Section 171.805(c).
(d) The comptroller shall notify a taxable entity in writing
of the comptroller's decision to grant or deny the application
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. 171.808. ASSIGNMENT PROHIBITED; EXCEPTION. A taxable
entity may not convey, assign, or transfer a strong families credit
awarded 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. 171.809. RULES. The commission and the comptroller
may adopt rules and procedures necessary to implement, administer,
and enforce this subchapter.
Sec. 171.810. EXPIRATION. (a) This subchapter expires
January 1, 2028.
(b) The expiration of this subchapter does not affect the
carryforward of a credit under Section 171.806 or those credits for
which a taxable entity is eligible after the date this subchapter
expires based on designated contributions made before that date.
SECTION 4. Subtitle I, Title 2, Tax Code, is amended by
adding Chapter 203 to read as follows:
CHAPTER 203. STRONG FAMILIES TAX CREDIT
Sec. 203.001. DEFINITIONS. In this chapter, "designated
contribution," "eligible organization," and "strong families
credit" have the meanings assigned by Section 171.801.
Sec. 203.002. ELIGIBILITY. A producer that makes a
designated contribution that meets the requirements of Subchapter
P, Chapter 171, is entitled to apply for a strong families credit in
the amount and under the conditions provided by this chapter
against tax paid under Chapter 201 or 202.
Sec. 203.003. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject
to Subsections (b) and (c), the amount of a producer's credit for a
state fiscal year is equal to the lesser of:
(1) the amount of designated contributions made to
eligible organizations during the state fiscal year; or
(2) the amount of taxes paid by the producer under
Chapter 201 or 202, as applicable, during the state fiscal year.
(b) The maximum amount of strong families credits that may
be awarded is the amount provided by Section 171.805(c).
(c) The maximum amount of designated contributions a
producer may make to all eligible organizations in a state fiscal
year is the amount provided by Section 171.805(b).
(d) The comptroller shall allocate strong families credits
as provided by Section 171.805(d).
Sec. 203.004. APPLICATION. (a) The person responsible for
paying the tax under Chapter 201 or 202 must apply to claim a strong
families credit against that tax.
(b) The person responsible for paying the tax 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 person is eligible for the credit under
this section.
(c) The comptroller may award a credit to a person who
applies for the credit under Subsection (a) if the person is
eligible for the credit and the credit is available under Section
171.805(c).
(d) The comptroller shall notify a person in writing of the
comptroller's decision to grant or deny the application under
Subsection (a). If the comptroller denies a person's application,
the comptroller shall include in the notice of denial the reasons
for the comptroller's decision.
Sec. 203.005. RULES. The comptroller may adopt rules and
procedures necessary to implement, administer, and enforce this
chapter.
Sec. 203.006. EXPIRATION. (a) This chapter expires
January 1, 2028.
(b) The expiration of this chapter does not affect credits
for which a person is eligible after the date this chapter expires
based on designated contributions made before that date.
SECTION 5. (a) An entity may apply for a credit under
Subchapter D, Chapter 201, Alcoholic Beverage Code, as added by
this Act, Chapter 230, Insurance Code, as added by this Act,
Subchapter P, Chapter 171, Tax Code, as added by this Act, or
Chapter 203, Tax Code, as added by this Act, only for a designated
contribution made on or after January 1, 2026.
(b) Subchapter D, Chapter 201, Alcoholic Beverage Code, as
added by this Act, Chapter 230, Insurance Code, as added by this
Act, Subchapter P, Chapter 171, Tax Code, as added by this Act, and
Chapter 203, Tax Code, as added by this Act, apply only to a report
originally due on or after January 1, 2026.
SECTION 6. This Act takes effect January 1, 2026.
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