The bill proposes the addition of Subchapter O to Chapter 171 of the Texas Tax Code, establishing a franchise tax credit for taxable entities that participate in the federal electronic verification of employment authorization program, known as the E-verify program. Under this new subchapter, a taxable entity is entitled to a credit against the franchise tax if it registers and participates in the E-verify program for at least 12 consecutive months. The amount of the credit is equal to the franchise tax due after applying all other applicable credits, but entities are limited to claiming only one credit under this subchapter.

The bill outlines the application process for the credit, requiring entities to apply on or with their tax report for the period in which the credit is claimed, and to provide any additional information requested by the comptroller to verify eligibility. The comptroller is tasked with adopting necessary rules for the implementation and administration of this subchapter. The provisions of this bill will apply only to reports originally due on or after January 1, 2026, and it will take effect immediately if it receives a two-thirds vote from both houses of the legislature; otherwise, it will take effect on September 1, 2025.

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