Relating to certain expenditures by public institutions of higher education and university systems that are eligible for certain tax credits.
Summary
HB 4044 amends the Texas Tax Code to expand which expenditures by public institutions of higher education and university systems can qualify as eligible costs and expenses for certain federal tax credit purposes. Under current law, the bill removes the application of the depreciation and tax-exempt use rules in Internal Revenue Code Section 47(c)(2) for costs and expenses incurred by tax-exempt entities and, specifically, by institutions of higher education and university systems, so long as the other requirements of Section 47(c)(2) are met.
The bill also includes a delayed change effective January 1, 2035. Beginning on that date, the special treatment for institutions of higher education and university systems is removed, and the statute would apply only to entities exempt from federal income tax under Section 501(a). The bill takes effect January 1, 2026, and applies prospectively to costs and expenses incurred on or after the relevant effective dates.
Impact
HB 4044 changes Section 172.102(b) of the Texas Tax Code, affecting eligibility for certain tax credits tied to expenditures by nonprofit entities and public higher education institutions. For nearly a decade after enactment, public institutions of higher education and university systems are treated as eligible entities under the statute, which may increase their ability to claim or support tax-credit-eligible projects. After January 1, 2035, that special inclusion sunsets, narrowing the provision back to tax-exempt entities generally and excluding the higher-education-specific language.
Sentiment
The bill appears to have been received favorably and moved with little visible opposition in committee, passing the Senate Finance Committee 13-0. The available voting history also suggests the measure advanced without major controversy, though it did face some no votes in House floor action. Overall, the sentiment reflected in the legislative record is generally supportive, especially among members who favor expanding financing tools for public higher education.
Contention
The main policy question is whether public institutions of higher education and university systems should receive the same tax-credit eligibility treatment as other tax-exempt entities, and for how long. Supporters likely view the bill as a way to broaden access to tax-credit financing for university-related expenditures, while any opposition would center on the fiscal effect, the use of tax credits for public institutions, or the temporary nature of the carve-out. The delayed sunset in 2035 suggests a compromise between expanding eligibility now and limiting the long-term scope of the change.
Updates the statutory terminology by replacing the phrase "institutions of higher learning" with that of "educational institutions" and redefines child daycare centers as educational institutions.
Relating to a requirement that public institutions of higher education provide applicants with certain information regarding eligibility for public health programs.
Updates the statutory terminology by replacing the phrase "institutions of higher learning" with that of "educational institutions", and would redefine child daycare centers as educational institutions.