Bill Text: TX SB1097 | 2025-2026 | 89th Legislature | Introduced
Bill Title: Relating to a franchise tax credit for taxable entities that make contributions to employees' Texas 529 plans.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced) 2025-02-04 - Filed [SB1097 Detail]
Download: Texas-2025-SB1097-Introduced.html
| 89R9677 CJC-D | ||
| By: Hughes | S.B. No. 1097 | |
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| relating to a franchise tax credit for taxable entities that make | ||
| contributions to employees' Texas 529 plans. | ||
| BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
| SECTION 1. Chapter 171, Tax Code, is amended by adding | ||
| Subchapter U to read as follows: | ||
| SUBCHAPTER U. TAX CREDIT FOR TEXAS 529 PLAN CONTRIBUTION | ||
| Sec. 171.9231. DEFINITIONS. In this subchapter: | ||
| (1) "Texas 529 plan" means a qualified tuition program | ||
| under Section 529, Internal Revenue Code of 1986, as amended, | ||
| administered by the Prepaid Higher Education Tuition Board under | ||
| Chapter 54, Education Code. | ||
| (2) "Texas 529 plan contribution" means the dollar | ||
| amount of a contribution made by a taxable entity to a Texas 529 | ||
| plan owned by an employee of the entity. The term does not include | ||
| salary or wages paid by the taxable entity to the employee for the | ||
| employee's service. | ||
| Sec. 171.9232. ENTITLEMENT TO CREDIT. A taxable entity is | ||
| entitled to a credit in the amount and under the conditions provided | ||
| by this subchapter against the tax imposed under this chapter. | ||
| Sec. 171.9233. QUALIFICATION. A taxable entity qualifies | ||
| for a credit under this subchapter if the taxable entity | ||
| contributes to at least one Texas 529 plan of each employee of the | ||
| taxable entity who owns one or more Texas 529 plans and agrees to | ||
| allow the entity to contribute to the plan. | ||
| Sec. 171.9234. AMOUNT OF CREDIT; LIMITATION. (a) Subject | ||
| to Subsection (b), the amount of the credit a taxable entity may | ||
| claim on a report is equal to 25 percent of the total amount of Texas | ||
| 529 plan contributions made by the entity during the period on which | ||
| the report is based. | ||
| (b) The total credit claimed on a report, including the | ||
| amount of any carryforward under Section 171.9235, may not exceed | ||
| the amount of franchise tax due for the report after applying all | ||
| other applicable credits. | ||
| Sec. 171.9235. CARRYFORWARD. (a) If a taxable entity is | ||
| eligible for a credit that exceeds the limitation under Section | ||
| 171.9234(b), the entity may carry the unused credit forward for not | ||
| more than five consecutive reports. | ||
| (b) A carryforward is considered the remaining portion of a | ||
| credit that cannot be claimed on a report because of the limitation | ||
| under Section 171.9234(b). | ||
| (c) Credits, including a carryforward, are considered to be | ||
| used in the following order: | ||
| (1) a carryforward under this section; and | ||
| (2) a credit for the period on which the report is | ||
| based. | ||
| Sec. 171.9236. APPLICATION FOR CREDIT. (a) A taxable | ||
| entity must apply for a credit under this subchapter on or with the | ||
| report for the period for which the credit is claimed. | ||
| (b) A taxable entity must apply for the credit in the manner | ||
| prescribed by the comptroller and include with the application any | ||
| information requested by the comptroller to determine whether the | ||
| entity is eligible for the credit under this subchapter. | ||
| Sec. 171.9237. SALE OR ASSIGNMENT OF CREDIT. (a) A taxable | ||
| entity that makes a Texas 529 plan contribution may sell or assign | ||
| all or part of the credit that may be claimed for that contribution | ||
| to one or more taxable entities, and any taxable entity to which all | ||
| or part of the credit is sold or assigned may sell or assign all or | ||
| part of the credit to another taxable entity. There is no limit on | ||
| the total number of transactions for the sale or assignment of all | ||
| or part of the total credit authorized under this subchapter. | ||
| (b) A taxable entity that sells or assigns a credit under | ||
| this section and the taxable entity to which the credit is sold or | ||
| assigned shall jointly submit written notice of the sale or | ||
| assignment to the comptroller not later than the 30th day after the | ||
| date of the sale or assignment. The notice must include: | ||
| (1) the date on which the credit was originally | ||
| established; | ||
| (2) the date of the sale or assignment; | ||
| (3) the amount of the credit sold or assigned and the | ||
| remaining period during which it may be used; | ||
| (4) the names, addresses, and federal tax | ||
| identification numbers of the taxable entity that sold or assigned | ||
| the credit or part of the credit and the taxable entity to which the | ||
| credit or part of the credit was sold or assigned; and | ||
| (5) the amount of the credit owned by the selling or | ||
| assigning taxable entity before the sale or assignment, and the | ||
| amount the selling or assigning taxable entity retained, if any, | ||
| after the sale or assignment. | ||
| (c) The sale or assignment of a credit in accordance with | ||
| this section does not extend the period for which a credit may be | ||
| carried forward. | ||
| (d) After a taxable entity claims a credit for a Texas 529 | ||
| plan contribution under this subchapter, another entity may not use | ||
| the same expenditure as the basis for another credit. | ||
| Sec. 171.9238. RULES. The comptroller shall adopt rules | ||
| necessary to implement and administer this subchapter. | ||
| SECTION 2. Subchapter U, Chapter 171, Tax Code, as added by | ||
| this Act, applies only to a report originally due on or after | ||
| January 1, 2026. | ||
| SECTION 3. This Act takes effect January 1, 2026. | ||
