HB2740 - Relating to a franchise tax credit for a taxable entity that provides paid parental leave to the entity's employees.

  89R11338 JBD-F     By: Martinez Fischer H.B. No. 2740       A BILL TO BE ENTITLED   AN ACT   relating to a franchise tax credit for a taxable entity that   provides paid parental leave to the entity's employees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Chapter 171, Tax Code, is amended by adding   Subchapter R to read as follows:   SUBCHAPTER R. TAX CREDIT FOR PAID PARENTAL LEAVE           Sec. 171.8001.  DEFINITIONS. In this subchapter:                 (1)     "Employee" means an individual who performs   services for an employer for compensation under an oral or written   contract of hire, whether express or implied. The term does not   include an independent contractor.                 (2)     "Infant" means a child younger than one year of   age.           Sec.   171.8002.     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.   171.8003.     QUALIFICATION. A taxable entity with   employees who are based in Texas during the period on which the   report is based qualifies for a credit under this subchapter if the   taxable entity provides paid parental leave to an employee   according to a policy adopted by the taxable entity under which an   employee is entitled to at least:                 (1)     eight weeks of paid leave following giving birth   to an infant;                 (2)     four weeks of paid leave following the birth of the   employee's infant if the employee did not give birth to the   employee's infant, including because the birth occurred through   surrogacy; and                 (3)     four weeks of paid leave following the adoption of   an infant by the employee or the employee's spouse or placement by   the Department of Family and Protective Services of an infant in   substitute care with the employee or the employee's spouse.           Sec.   171.8004.     AMOUNT OF CREDIT. The amount of the credit   for a tax report is equal to the lesser of:                 (1)     the amount equal to the following percentages of   the actual costs incurred to pay wages to employees taking paid   parental leave during the accounting period on which the report is   based:                       (A)     if the entity employs 500 or fewer   Texas-based employees, 100 percent;                       (B)     if the entity employs more than 500 but fewer   than 1,500 Texas-based employees, 50 percent; or                       (C)     if the entity employs 1,500 or more   Texas-based employees, 10 percent; or                 (2)     the amount of franchise tax due for the report   after applying all other applicable credits.           Sec.   171.8005.     APPLICATION FOR CREDIT. (a) A taxable   entity must apply for a credit under this subchapter on or with the   tax report for the period for which the credit is claimed.           (b)     The comptroller shall promulgate a form for the   application for the credit. A taxable entity must use the form in   applying for the credit.           Sec.   171.8006.     PERIOD FOR WHICH CREDIT MAY BE CLAIMED. A   taxable entity may claim a credit under this subchapter for a tax   report only in connection with paid parental leave provided to an   employee during the accounting period on which the report is based.           Sec.   171.8007.     RULES. The comptroller shall adopt rules   regarding the manner by which a taxable entity may demonstrate the   actual costs incurred for purposes of Section 171.8004.           Sec.   171.8008.     DATA COLLECTION AND PUBLICATION.   (a)   Not   later than December 31 of each year, the comptroller shall collect   and publish on the comptroller's Internet website the following   information:                 (1)     the total amount of credits claimed under this   subchapter for the preceding calendar year; and                 (2)     the total number of Texas-based employees with   respect to whom taxable entities provided paid parental leave for   which the entities claimed a credit under this subchapter in the   preceding calendar year.           (b)     The comptroller shall provide notice to the legislature   of the publication of the data required by Subsection (a) on the   date the comptroller publishes that data.          SECTION 2.  This Act applies only to a tax report originally   due on or after the effective date of this Act.          SECTION 3.  This Act takes effect January 1, 2026.