Substitute House Bill No. 7166, now Public Act No. 25-165, significantly revises the tax credit provisions for research and development expenses in Connecticut, effective January 1, 2025. The bill repeals the existing Section 12-217n and replaces it with new definitions and criteria, aligning the definition of "research and development expenses" with the Internal Revenue Code and changing the term "company" to "taxpayer." It introduces a new definition for "qualified small business," specifying it as a taxpayer with gross income not exceeding one hundred million dollars, and includes single-member limited liability companies engaged in manufacturing. The tax credit calculation is based on incurred research and development expenses, with limits on the amount that can be claimed annually and provisions for carrying forward excess credits for up to fifteen years. Additionally, the bill establishes a certification process for aerospace companies seeking tax credits, requiring them to demonstrate no significant reduction in their historical economic base functions.

The bill also amends the tax credit framework for production expenses incurred by state-certified qualified productions, specifying eligible expenditures and introducing a nonrefundable administrative fee for application processing. It mandates that production companies apply for tax credit vouchers within ninety days of independent certification and outlines the process for transferring tax credits between taxpayers. Furthermore, the legislation establishes a workforce incentive program for employers hiring individuals with intellectual disabilities, providing grants based on workforce composition. The bill modifies existing tax credit structures, including limits on the amount of credits that can be claimed and the introduction of new definitions for different types of tax credits. Overall, the legislation aims to enhance support for research and development activities, incentivize production within the state, and promote economic development initiatives.

Statutes affected:
Raised Bill: 12-217jj, 12-217kk
CE Joint Favorable Substitute Change of Reference: 12-217jj, 12-217kk
FIN Joint Favorable: 12-217jj, 12-217kk
File No. 885: 12-217jj, 12-217kk
Public Act No. 25-165: 12-217n, 12-217j, 12-217jj, 12-217kk, 32-7v, 32-5a, 12-217ll