H.B. No. 5273 proposes a franchise tax credit aimed at incentivizing licensed child-care centers in Texas to expand their capacity for child care. The bill introduces a new subchapter, Subchapter P-1, to Chapter 171 of the Tax Code, which defines a "licensed child-care center" and outlines the eligibility criteria for the tax credit. To qualify, a taxable entity must operate one or more licensed child-care centers that are certified under the Texas Rising Star Program. The credit amount is determined based on the percentage increase in capacity, with specific percentages of additional salary costs covered by the credit depending on the level of capacity increase.

The bill also stipulates that the total credit claimed cannot exceed the franchise tax due after applying any other applicable credits. Taxable entities must apply for the credit with their tax report for the relevant period and provide any necessary information requested by the comptroller. Additionally, the bill prohibits the assignment of the credit to another entity unless all assets of the taxable entity are transferred in the same transaction. The provisions of this Act will take effect on January 1, 2026, and apply to reports due on or after that date.

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