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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 make |
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contributions to employees' Texas 529 plans. |
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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 U to read as follows: |
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SUBCHAPTER U. TAX CREDIT FOR TEXAS 529 PLAN CONTRIBUTION |
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Sec. 171.9231. DEFINITIONS. In this subchapter: |
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(1) "Texas 529 plan" means a qualified tuition program |
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under Section 529, Internal Revenue Code of 1986, as amended, |
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administered by the Prepaid Higher Education Tuition Board under |
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Chapter 54, Education Code. |
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(2) "Texas 529 plan contribution" means the dollar |
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amount of a contribution made by a taxable entity to a Texas 529 |
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plan owned by an employee of the entity. The term does not include |
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salary or wages paid by the taxable entity to the employee for the |
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employee's service. |
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Sec. 171.9232. 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. 171.9233. QUALIFICATION. A taxable entity qualifies |
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for a credit under this subchapter if the taxable entity |
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contributes to at least one Texas 529 plan of each employee of the |
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taxable entity who owns one or more Texas 529 plans and agrees to |
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allow the entity to contribute to the plan. |
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Sec. 171.9234. AMOUNT OF CREDIT; LIMITATION. (a) Subject |
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to Subsection (b), the amount of the credit a taxable entity may |
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claim on a report is equal to 25 percent of the total amount of Texas |
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529 plan contributions made by the entity during the period on which |
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the report is based. |
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(b) The total credit claimed on a report, including the |
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amount of any carryforward under Section 171.9235, may not exceed |
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the amount of franchise tax due for the report after applying all |
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other applicable credits. |
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Sec. 171.9235. CARRYFORWARD. (a) If a taxable entity is |
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eligible for a credit that exceeds the limitation under Section |
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171.9234(b), the entity may carry the unused credit forward for not |
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more than five consecutive reports. |
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(b) A carryforward is considered the remaining portion of a |
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credit that cannot be claimed on a report because of the limitation |
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under Section 171.9234(b). |
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(c) Credits, including a carryforward, are considered to be |
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used in the following order: |
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(1) a carryforward under this section; and |
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(2) a credit for the period on which the report is |
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based. |
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Sec. 171.9236. 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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report 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. 171.9237. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable |
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entity that makes a Texas 529 plan contribution may sell or assign |
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all or part of the credit that may be claimed for that contribution |
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to one or more taxable entities, and any taxable entity to which all |
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or part of the credit is sold or assigned may sell or assign all or |
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part of the credit to another taxable entity. There is no limit on |
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the total number of transactions for the sale or assignment of all |
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or part of the total credit authorized under this subchapter. |
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(b) A taxable entity that sells or assigns a credit under |
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this section and the taxable entity to which the credit is sold or |
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assigned shall jointly submit written notice of the sale or |
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assignment to the comptroller not later than the 30th day after the |
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date of the sale or assignment. The notice must include: |
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(1) the date on which the credit was originally |
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established; |
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(2) the date of the sale or assignment; |
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(3) the amount of the credit sold or assigned and the |
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remaining period during which it may be used; |
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(4) the names, addresses, and federal tax |
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identification numbers of the taxable entity that sold or assigned |
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the credit or part of the credit and the taxable entity to which the |
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credit or part of the credit was sold or assigned; and |
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(5) the amount of the credit owned by the selling or |
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assigning taxable entity before the sale or assignment, and the |
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amount the selling or assigning taxable entity retained, if any, |
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after the sale or assignment. |
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(c) The sale or assignment of a credit in accordance with |
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this section does not extend the period for which a credit may be |
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carried forward. |
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(d) After a taxable entity claims a credit for a Texas 529 |
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plan contribution under this subchapter, another entity may not use |
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the same expenditure as the basis for another credit. |
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Sec. 171.9238. RULES. The comptroller shall adopt rules |
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necessary to implement and administer this subchapter. |
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SECTION 2. Subchapter U, Chapter 171, Tax Code, as added by |
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this Act, applies only to a report originally due on or after |
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January 1, 2026. |
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SECTION 3. This Act takes effect January 1, 2026. |