The bill, S.B. No. 1781, introduces a new franchise tax credit for taxable entities in Texas that provide child care for their employees. It adds Subchapter V to Chapter 171 of the Tax Code, which outlines the definitions, qualifications, and application process for the credit. A taxable entity can qualify for the credit if it subsidizes all or part of its employees' child care costs at a licensed child-care center, either operated by the entity or a licensed commercial or home-based center. The credit amount is determined by the lesser of the costs incurred for subsidizing child care or 1.5% of the franchise tax due after applying other credits.

Additionally, the bill stipulates that entities must apply for the credit on their tax report and provide necessary information as requested by the comptroller to verify eligibility. The credit is non-transferable unless the entity's assets are substantially transferred in the same transaction. The comptroller is tasked with adopting rules to implement this subchapter. The provisions of this Act will apply to reports due on or after its effective date of January 1, 2026.

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