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Bill

HB 2740

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

89th Legislature (2025) Introduced by Trey Martinez Fischer

Texas would offer franchise tax credits to businesses voluntarily providing paid parental leave, using tax incentives to expand family benefits without direct government spending.

Referred to Ways & Means
#business&commerce--general(i0050) #comptrollerofpublicaccounts(v2608) #family&medicalleave(s0419) #labor--managementrelations(i0465) #taxation--franchise(i0807)
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Bill Summary · HB 2740

Legislative bill overview

HB 2740 would create a franchise tax credit for businesses in Texas that voluntarily provide paid parental leave to their employees. The credit would incentivize companies to offer this benefit by reducing their state tax obligations based on their parental leave expenditures.

Why is this important

Paid parental leave is largely unavailable in Texas, where state law does not mandate or substantially subsidize such benefits—making this a way to expand family support without direct government spending. The tax credit approach uses market incentives to encourage private sector adoption of a benefit that typically improves employee retention, reduces turnover costs, and supports working families.

Potential points of contention

  • Revenue impact: The state would forgo franchise tax revenue; critics may question whether this tax expenditure is the best use of public funds compared to direct government leave programs
  • Equity concerns: Tax credits primarily benefit larger, profitable companies that can afford parental leave programs, potentially widening disparities between well-resourced and smaller businesses
  • Program design details: The bill's specific provisions—credit amount, eligible leave duration, employee thresholds, and income limits—are not detailed in this summary but would significantly affect costs and effectiveness

Compiled from official sources — confirm details with the bill’s official record.

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