The bill proposes a franchise tax credit aimed at incentivizing licensed child-care centers in Texas to increase their capacity for child care. It introduces a new subchapter, Subchapter P-1, to Chapter 171 of the Tax Code, which defines a "licensed child-care center" and outlines the eligibility criteria for the tax credit. To qualify, a taxable entity must operate one or more licensed child-care centers that are certified under the Texas Rising Star Program. The credit amount is determined based on the percentage increase in capacity, with specific percentages of additional salary costs covered by the credit depending on the level of capacity increase.

Additionally, the bill stipulates that a taxable entity can continue to claim the credit for two subsequent reports if it maintains the increased capacity. The total credit claimed cannot exceed the franchise tax due after applying any other credits. The bill also includes provisions for the application process, prohibits the assignment of credits unless all assets are transferred, and mandates that the comptroller adopt necessary rules for implementation. The act is set to take effect on January 1, 2026, and applies to reports due on or after that date.

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