89R1402 SRA-D
By: West S.B. No. 654
A BILL TO BE ENTITLED
AN ACT
relating to a franchise tax credit for certain child-care centers
that increase their capacity to care for children.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. It is the intent of the legislature that the
franchise tax credit proposed by this Act will incentivize
large-scale child-care providers to create additional capacity at
the providers' locations and therefore significantly increase the
availability of child care in this state.
SECTION 2. Chapter 171, Tax Code, is amended by adding
Subchapter P-1 to read as follows:
SUBCHAPTER P-1. TAX CREDIT FOR CHILD-CARE CENTERS THAT INCREASE
CAPACITY
Sec. 171.821. DEFINITION. In this subchapter, "licensed
child-care center" means a child-care center licensed, certified,
or registered by the Department of Family and Protective Services
to provide assessment, care, training, education, custody,
treatment, or supervision for a child who is not related by blood,
marriage, or adoption to the owner or operator of the center, for
all or part of the 24-hour day, whether or not the center is
operated for profit or charges for the services it offers.
Sec. 171.822. 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. 171.823. QUALIFICATION. A taxable entity qualifies
for a credit under this subchapter if the taxable entity operates
one or more licensed child-care centers, each of which is certified
as a provider in the Texas Rising Star Program.
Sec. 171.824. AMOUNT OF CREDIT; LIMITATIONS. (a) This
subsection applies to a taxable entity other than a taxable entity
described by Subsection (b). Subject to Subsections (c) and (d),
the amount of the credit a taxable entity to which this subsection
applies may claim on a report for each licensed child-care center
location operated by the entity is equal to:
(1) if the capacity of the licensed child-care center
is increased 25 percent or more but less than 50 percent during the
period on which the report is based, 50 percent of the additional
salary associated with the increase in the capacity of the licensed
child-care center paid by the entity during the period on which the
report is based;
(2) if the capacity of the licensed child-care center
is increased by 50 percent or more but less than 75 percent during
the period on which the report is based, 75 percent of the
additional salary associated with the increase in the capacity of
the licensed child-care center paid by the entity during the period
on which the report is based; or
(3) if the capacity of the licensed child-care center
is increased by 75 percent or more during the period on which the
report is based, 100 percent of the additional salary associated
with the increase in the capacity of the licensed child-care center
paid by the entity during the period on which the report is based.
(b) This subsection applies only to a taxable entity that is
a member of an affiliated group that files a combined report under
Section 171.1014. Subject to Subsections (c) and (d), the amount of
the credit a taxable entity to which this subsection applies may
claim on a report is equal to:
(1) if the capacity of at least 50 percent of the
licensed child-care center locations operated by all members of the
taxable entity's combined group is increased by 25 percent or more
but less than 50 percent during the period on which the report is
based, 50 percent of the additional salary associated with the
increase in capacity at those locations paid during the period on
which the report is based;
(2) if the capacity of at least 50 percent of the
licensed child-care center locations operated by all members of the
taxable entity's combined group is increased by 50 percent or more
but less than 75 percent during the period on which the report is
based, 75 percent of the additional salary associated with the
increase in capacity at those locations paid during the period on
which the report is based; or
(3) if the capacity of at least 50 percent of the
licensed child-care center locations operated by all members of the
taxable entity's combined group is increased by 75 percent or more
during the period on which the report is based, 100 percent of the
additional salary associated with the increase in capacity at those
locations paid during the period on which the report is based.
(c) A taxable entity may continue to claim a credit in the
amount the entity claims on the first report on which the entity
claims a credit under this subchapter on the two reports due
subsequent to that first report if the entity maintains the
increase in child-care capacity that forms the basis of the credit
claimed on the first report during the period covered by each of the
two subsequent reports.
(d) The total amount of credit claimed by a taxable entity
on a report may not exceed the amount of franchise tax due for the
report after the application of any other applicable credits.
Sec. 171.825. APPLICATION FOR CREDIT. (a) A taxable entity
must apply for a credit under this subchapter on or with the report
for the period for which the credit is claimed.
(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.
Sec. 171.826. ASSIGNMENT PROHIBITED; EXEMPTION. A taxable
entity may not convey, assign, or transfer a credit under this
subchapter to another entity unless substantially all of the assets
of the taxable entity are conveyed, assigned, or transferred in the
same transaction.
Sec. 171.827. RULES. The comptroller shall adopt rules
necessary to implement and administer this subchapter.
SECTION 3. This Act applies only to a report originally due
on or after the effective date of this Act.
SECTION 4. This Act takes effect January 1, 2026.