79R8362 KLA-D

By:  Herrero                                                      H.B. No. 3445



A BILL TO BE ENTITLED

AN ACT

relating to a franchise tax credit for wages paid to graduates of 
certain institutions of higher education.
	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 WAGES PAID TO GRADUATES

OF CERTAIN INSTITUTIONS OF HIGHER EDUCATION
	Sec. 171.931.  DEFINITION.  In this subchapter, "public or 
private institution of higher education" has the meaning assigned 
by Section 61.801, Education Code.
	Sec. 171.932.  ENTITLEMENT TO CREDIT.  A corporation is 
entitled to a credit in the amount and under the conditions provided 
by this subchapter against the tax imposed under this chapter.
	Sec. 171.933.  QUALIFICATION.  A corporation qualifies for a 
credit under this subchapter for each employee who:
		(1)  is a graduate of a public or private institution of 
higher education at the time the employee is hired if the employee 
attended a campus of that institution that is located in the same 
county as the county in which the employee performs the employee's 
primary job functions; or
		(2)  graduates from a public or private institution of 
higher education during the time the employee is employed with the 
corporation if the employee attended a campus of that institution 
that is located in the same county as the county in which the 
employee performs the employee's primary job functions.
	Sec. 171.934.  AMOUNT;  LIMITATIONS.  (a) The amount of the 
credit is 10 percent of the wages paid by the corporation for each 
qualified employee.
	(b)  A corporation may claim the credit only for wages paid 
to the qualified employee:
		(1)  for a position located or based in this state; and                
		(2)  after the employee graduates from the public or 
private institution of higher education.
	Sec. 171.935.  APPLICATION FOR CREDIT.  (a)  A corporation 
must apply for a credit under this subchapter on or with the tax 
report for the period for which the credit is claimed.
	(b)  The comptroller shall promulgate a form for the 
application for the credit.  A corporation must use the form in 
applying for the credit.
	Sec. 171.936.  PERIOD FOR WHICH CREDIT MAY BE CLAIMED.  A 
corporation may claim a credit under this subchapter for wages paid 
during an accounting period only against the tax owed for the 
corresponding privilege period.
	SECTION 2.  A corporation may claim the credit under 
Subchapter W, Chapter 171, Tax Code, as added by this Act, only for 
any wages paid or incurred on or after the effective date of this 
Act and only on a franchise tax report due under Chapter 171, Tax 
Code, on or after January 1, 2006.
	SECTION 3.  This Act takes effect January 1, 2006.