The bill proposes the addition of a new subchapter to Chapter 171 of the Texas Tax Code, establishing a franchise tax credit for taxable entities that provide child care. This new subchapter, titled "Tax Credit for Provision of Child Care," defines an "employee" and outlines the conditions under which a taxable entity can qualify for the credit. Specifically, a taxable entity is eligible if it subsidizes all or part of its employees' child care costs at either a licensed child-care center operated by the entity or a licensed commercial or home-based child-care center.

The bill details the amount of the credit, which is the lesser of the costs incurred for subsidizing employee child care or 1.5 percent of the franchise tax due after applying other credits. It also stipulates that entities must apply for the credit with their tax report and provides guidelines for the comptroller to implement the necessary rules. The provisions of this act will apply to reports due on or after its effective date of January 1, 2026.

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