80R2084 KLA-D

By: Herrero H.B. No. 355

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 K to read as follows: SUBCHAPTER K. TAX CREDIT FOR WAGES PAID TO GRADUATES OF CERTAIN INSTITUTIONS OF HIGHER EDUCATION

Sec. 171.601. DEFINITION. In this subchapter, "public or private institution of higher education" has the meaning assigned by Section 61.801, Education Code.

Sec. 171.602. 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. 171.603. QUALIFICATION. A taxable entity 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 taxable entity 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. 171.604. AMOUNT; LIMITATIONS. (a) The amount of the credit is 10 percent of the wages paid by the taxable entity for each qualified employee.

(b) A taxable entity 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. 171.605. APPLICATION FOR CREDIT. (a) A taxable entity 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 taxable entity must use the form in applying for the credit.

Sec. 171.606. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A taxable entity 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 taxable entity may claim the credit under Subchapter K, 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, 2008.

SECTION 3. This Act takes effect January 1, 2008 .