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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 a taxable entity that |
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provides paid parental leave to the entity's 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 R to read as follows: |
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SUBCHAPTER R. TAX CREDIT FOR PAID PARENTAL LEAVE |
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Sec. 171.8001. 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) "Infant" means a child younger than one year of |
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age. |
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Sec. 171.8002. 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. 171.8003. QUALIFICATION. A taxable entity with |
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employees who are based in Texas during the period on which the |
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report is based qualifies for a credit under this subchapter if the |
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taxable entity provides paid parental leave to an employee |
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according to a policy adopted by the taxable entity under which an |
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employee is entitled to at least: |
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(1) eight weeks of paid leave following giving birth |
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to an infant; |
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(2) four weeks of paid leave following the birth of the |
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employee's infant if the employee did not give birth to the |
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employee's infant, including because the birth occurred through |
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surrogacy; and |
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(3) four weeks of paid leave following the adoption of |
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an infant by the employee or the employee's spouse or placement by |
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the Department of Family and Protective Services of an infant in |
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substitute care with the employee or the employee's spouse. |
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Sec. 171.8004. AMOUNT OF CREDIT. The amount of the credit |
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for a tax report is equal to the lesser of: |
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(1) the amount equal to the following percentages of |
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the actual costs incurred to pay wages to employees taking paid |
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parental leave during the accounting period on which the report is |
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based: |
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(A) if the entity employs 500 or fewer |
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Texas-based employees, 100 percent; |
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(B) if the entity employs more than 500 but fewer |
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than 1,500 Texas-based employees, 50 percent; or |
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(C) if the entity employs 1,500 or more |
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Texas-based employees, 10 percent; or |
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(2) the amount of franchise tax due for the report |
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after applying all other applicable credits. |
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Sec. 171.8005. APPLICATION FOR CREDIT. (a) A taxable |
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entity must apply for a credit under this subchapter on or with the |
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tax report for the period for which the credit is claimed. |
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(b) The comptroller shall promulgate a form for the |
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application for the credit. A taxable entity must use the form in |
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applying for the credit. |
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Sec. 171.8006. PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A |
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taxable entity may claim a credit under this subchapter for a tax |
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report only in connection with paid parental leave provided to an |
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employee during the accounting period on which the report is based. |
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Sec. 171.8007. RULES. The comptroller shall adopt rules |
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regarding the manner by which a taxable entity may demonstrate the |
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actual costs incurred for purposes of Section 171.8004. |
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Sec. 171.8008. DATA COLLECTION AND PUBLICATION. (a) Not |
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later than December 31 of each year, the comptroller shall collect |
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and publish on the comptroller's Internet website the following |
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information: |
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(1) the total amount of credits claimed under this |
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subchapter for the preceding calendar year; and |
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(2) the total number of Texas-based employees with |
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respect to whom taxable entities provided paid parental leave for |
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which the entities claimed a credit under this subchapter in the |
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preceding calendar year. |
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(b) The comptroller shall provide notice to the legislature |
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of the publication of the data required by Subsection (a) on the |
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date the comptroller publishes that data. |
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SECTION 2. This Act applies only to a tax report originally |
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due on or after the effective date of this Act. |
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SECTION 3. This Act takes effect January 1, 2026. |