The bill proposes the addition of Subchapter N-1 to Chapter 171 of the Texas Tax Code, establishing a franchise tax credit for taxable entities that make contributions towards child care for their employees. The new legal language defines "child-care contribution" and outlines the eligibility criteria for the credit, which is equal to the total amount of contributions made during the reporting period, with a cap of $3,600 per child. The total credits awarded in a fiscal year are limited to $25 million, and the comptroller is tasked with creating rules for the allocation of these credits.

Additionally, the bill allows taxable entities to carry forward unused credits for up to five consecutive reports and permits the sale or assignment of credits among entities. The application process for the credit is also detailed, requiring entities to apply with their tax report and providing the comptroller discretion in awarding credits. The provisions of this subchapter will apply to reports due on or after January 1, 2026, with the act taking effect on the same date.

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