Bill Text: TX SB654 | 2025-2026 | 89th Legislature | Introduced


Bill Title: Relating to a franchise tax credit for certain child-care centers that increase their capacity to care for children.

Spectrum: Partisan Bill (Democrat 1-0)

Status: (Introduced) 2024-12-18 - Filed [SB654 Detail]

Download: Texas-2025-SB654-Introduced.html
  89R1402 SRA-D
 
  By: West S.B. No. 654
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to a franchise tax credit for certain child-care centers
  that increase their capacity to care for children.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  It is the intent of the legislature that the
  franchise tax credit proposed by this Act will incentivize
  large-scale child-care providers to create additional capacity at
  the providers' locations and therefore significantly increase the
  availability of child care in this state.
         SECTION 2.  Chapter 171, Tax Code, is amended by adding
  Subchapter P-1 to read as follows:
  SUBCHAPTER P-1.  TAX CREDIT FOR CHILD-CARE CENTERS THAT INCREASE
  CAPACITY
         Sec. 171.821.  DEFINITION. In this subchapter, "licensed
  child-care center" means a child-care center licensed, certified,
  or registered by the Department of Family and Protective Services
  to provide assessment, care, training, education, custody,
  treatment, or supervision for a child who is not related by blood,
  marriage, or adoption to the owner or operator of the center, for
  all or part of the 24-hour day, whether or not the center is
  operated for profit or charges for the services it offers.
         Sec. 171.822.  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. 171.823.  QUALIFICATION. A taxable entity qualifies
  for a credit under this subchapter if the taxable entity operates
  one or more licensed child-care centers, each of which is certified
  as a provider in the Texas Rising Star Program.
         Sec. 171.824.  AMOUNT OF CREDIT; LIMITATIONS. (a) This
  subsection applies to a taxable entity other than a taxable entity
  described by Subsection (b). Subject to Subsections (c) and (d),
  the amount of the credit a taxable entity to which this subsection
  applies may claim on a report for each licensed child-care center
  location operated by the entity is equal to:
               (1)  if the capacity of the licensed child-care center
  is increased 25 percent or more but less than 50 percent during the
  period on which the report is based, 50 percent of the additional
  salary associated with the increase in the capacity of the licensed
  child-care center paid by the entity during the period on which the
  report is based;
               (2)  if the capacity of the licensed child-care center
  is increased by 50 percent or more but less than 75 percent during
  the period on which the report is based, 75 percent of the
  additional salary associated with the increase in the capacity of
  the licensed child-care center paid by the entity during the period
  on which the report is based; or
               (3)  if the capacity of the licensed child-care center
  is increased by 75 percent or more during the period on which the
  report is based, 100 percent of the additional salary associated
  with the increase in the capacity of the licensed child-care center
  paid by the entity during the period on which the report is based.
         (b)  This subsection applies only to a taxable entity that is
  a member of an affiliated group that files a combined report under
  Section 171.1014. Subject to Subsections (c) and (d), the amount of
  the credit a taxable entity to which this subsection applies may
  claim on a report is equal to:
               (1)  if the capacity of at least 50 percent of the
  licensed child-care center locations operated by all members of the
  taxable entity's combined group is increased by 25 percent or more
  but less than 50 percent during the period on which the report is
  based, 50 percent of the additional salary associated with the
  increase in capacity at those locations paid during the period on
  which the report is based;
               (2)  if the capacity of at least 50 percent of the
  licensed child-care center locations operated by all members of the
  taxable entity's combined group is increased by 50 percent or more
  but less than 75 percent during the period on which the report is
  based, 75 percent of the additional salary associated with the
  increase in capacity at those locations paid during the period on
  which the report is based; or
               (3)  if the capacity of at least 50 percent of the
  licensed child-care center locations operated by all members of the
  taxable entity's combined group is increased by 75 percent or more
  during the period on which the report is based, 100 percent of the
  additional salary associated with the increase in capacity at those
  locations paid during the period on which the report is based.
         (c)  A taxable entity may continue to claim a credit in the
  amount the entity claims on the first report on which the entity
  claims a credit under this subchapter on the two reports due
  subsequent to that first report if the entity maintains the
  increase in child-care capacity that forms the basis of the credit
  claimed on the first report during the period covered by each of the
  two subsequent reports.
         (d)  The total amount of credit claimed by a taxable entity
  on a report may not exceed the amount of franchise tax due for the
  report after the application of any other applicable credits.
         Sec. 171.825.  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. 171.826.  ASSIGNMENT PROHIBITED; EXEMPTION. A taxable
  entity may not convey, assign, or transfer a credit under this
  subchapter to another entity unless substantially all of the assets
  of the taxable entity are conveyed, assigned, or transferred in the
  same transaction.
         Sec. 171.827.  RULES. The comptroller shall adopt rules
  necessary to implement and administer this subchapter.
         SECTION 3.  This Act applies only to a report originally due
  on or after the effective date of this Act.
         SECTION 4.  This Act takes effect January 1, 2026.
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