The bill proposes the addition of Subchapter U to Chapter 171 of the Texas Tax Code, establishing a franchise tax credit for taxable entities that contribute to their employees' Texas 529 plans. The new legal language defines key terms such as "Texas 529 plan" and "Texas 529 plan contribution," and outlines the eligibility criteria for the credit. Specifically, a taxable entity must contribute to at least one Texas 529 plan for each employee who owns such a plan and agrees to allow contributions. The credit amount is set at 25% of the total contributions made during the reporting period, with limitations on the total credit that can be claimed.

Additionally, the bill allows for the carryforward of unused credits for up to five consecutive reports and permits the sale or assignment of credits between taxable entities. The comptroller is tasked with adopting necessary rules for the implementation and administration of this subchapter. The provisions of this bill will apply to reports due on or after January 1, 2026, and the act will take effect on the same date.

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