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A BILL TO BE ENTITLED
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AN ACT
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relating to a franchise tax credit for taxable entities that |
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operate an on-site child-care center for use by the entity's |
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employees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Chapter 171, Tax Code, is amended by adding |
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Subchapter O-1 to read as follows: |
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SUBCHAPTER O-1. TAX CREDIT FOR OPERATION OF ON-SITE CHILD-CARE |
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CENTERS |
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Sec. 171.781. DEFINITIONS. In this subchapter: |
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(1) "Employee" means an individual who performs |
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services for an employer for compensation under an oral or written |
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contract of hire, whether express or implied. The term does not |
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include an independent contractor. |
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(2) "Licensed child-care center" means a child-care |
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center licensed, certified, or registered by the Department of |
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Family and Protective Services to provide assessment, care, |
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training, education, custody, treatment, or supervision for a child |
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who is not related by blood, marriage, or adoption to the owner or |
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operator of the center, for all or part of the 24-hour day, whether |
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or not the center is operated for profit or charges for the services |
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it offers. |
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Sec. 171.782. ENTITLEMENT TO CREDIT. A taxable entity is |
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entitled to a credit in the amount and under the conditions provided |
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by this subchapter against the tax imposed under this chapter. |
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Sec. 171.783. QUALIFICATION. A taxable entity qualifies |
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for a credit under this subchapter if the taxable entity |
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establishes and operates a licensed child-care center that is: |
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(1) available exclusively to the employees of the |
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entity for the purpose of providing care for the employees' |
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children and dependents; and |
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(2) located at or immediately adjacent to the site at |
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which the employees using the center work. |
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Sec. 171.784. AMOUNT OF CREDIT; LIMITATIONS. (a) Subject |
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to Subsection (c), the amount of the credit a taxable entity may |
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claim on a report is equal to: |
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(1) 30 percent of the entity's net cost to operate the |
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licensed child-care center during the period on which the report is |
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based; or |
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(2) if the licensed child-care center is certified as |
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a provider in the Texas Rising Star Program, 35 percent of the |
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entity's net cost to operate the licensed child-care center during |
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the period on which the report is based. |
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(b) Notwithstanding Subsection (a) and subject to |
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Subsection (c), the amount of the credit a taxable entity may claim |
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on the first report due after the date the entity first opens the |
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licensed child-care center is equal to 20 percent of the total |
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amount spent by the entity to construct the center and prepare the |
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center for initial operation. |
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(c) The total amount of credit claimed by a taxable entity |
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on a report may not exceed the lesser of: |
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(1) the amount of franchise tax due for the report |
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after the application of any other applicable credits; or |
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(2) the amount from the following list that applies to |
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the report: |
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(A) $100,000 if the total amount of franchise tax |
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due for the report is $3 million or less after applying all other |
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applicable credits; |
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(B) $250,000 if the total amount of franchise tax |
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due for the report is more than $3 million but less than $10 million |
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after applying all other applicable credits; or |
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(C) $500,000 if the total amount of franchise tax |
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due for the report is $10 million or more after applying all other |
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applicable credits. |
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Sec. 171.785. APPLICATION FOR CREDIT. (a) A taxable entity |
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must apply for a credit under this subchapter on or with the report |
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for the period for which the credit is claimed. |
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(b) A taxable entity must apply for the credit in the manner |
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prescribed by the comptroller and include with the application any |
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information requested by the comptroller to determine whether the |
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entity is eligible for the credit under this subchapter. |
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Sec. 171.786. ASSIGNMENT PROHIBITED; EXEMPTION. A taxable |
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entity may not convey, assign, or transfer a credit under this |
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subchapter to another entity unless substantially all of the assets |
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of the taxable entity are conveyed, assigned, or transferred in the |
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same transaction. |
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Sec. 171.787. RULES. The comptroller shall adopt rules |
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necessary to implement and administer this subchapter. |
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SECTION 2. This Act applies only to a report originally due |
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on or after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2026. |