The bill, S.B. No. 1097, introduces a new franchise tax credit for taxable entities that contribute to Texas 529 plans owned by their employees. It amends the Tax Code by adding Subchapter U, which outlines the definitions, qualifications, and application processes for the credit. A taxable entity can claim a credit equal to 25% of the total contributions made to Texas 529 plans during the reporting period, with a limitation that the total credit cannot exceed the franchise tax due after applying other credits. Additionally, if the credit exceeds this limitation, it can be carried forward for up to five consecutive reports.

The bill also allows for the sale or assignment of the credit between taxable entities, with specific requirements for notification to the comptroller regarding such transactions. 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 originally due on or after January 1, 2026, and the act will take effect on the same date.

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