Connecticut Research and Experimental Expenditures Credit

Program Overview

Connecticut offers both an incremental research credit and a non-incremental credit computed on qualifying research and development expenditures. The non-incremental credit uses a graduated rate scale that increases with spending, reaching a top tier for the largest research programs. Qualified small businesses may exchange unused credits with the state for a cash refund at a discounted rate, subject to applicable requirements. This exchange provision may provide a cash benefit to eligible businesses that cannot immediately use the credits against their Connecticut tax liability.

Eligibility

• C corporations subject to Connecticut corporation business tax may qualify.
• Qualifying research expenses must be incurred for research conducted in Connecticut.
• The program includes eligibility for both incremental and non-incremental research credits, subject to the applicable requirements for each credit.
• The credit exchange is limited to qualified small businesses that meet applicable gross-income thresholds.

Benefits

• Reduces Connecticut corporation business tax liability.
• Qualified small businesses may exchange unused credits for a cash refund equal to 65% of the credit value, subject to applicable requirements.
• The program provides both an incremental credit based on increased research spending and a non-incremental credit based on qualifying research expenditures.