Substitute House Bill No. 7166, also known as Public Act No. 25-165, amends existing laws concerning tax credits for research and development (R&D) and production expenses in Connecticut. The bill repeals Section 12-217n and introduces new provisions effective January 1, 2025, allowing taxpayers to claim tax credits for R&D expenses incurred within the state, with specific definitions and conditions. The term "company" is replaced with "taxpayer," and a new definition for "taxpayer" includes single-member limited liability companies engaged in manufacturing with over 3,000 employees. The bill establishes a tiered credit system based on R&D expenses, with different percentages for small and larger businesses, and outlines conditions for carrying forward credits. Additionally, it introduces provisions for aerospace companies and modifies the eligibility criteria for production tax credits, ensuring that expenses incurred outside the state do not qualify.

The bill further streamlines the application process for production tax credits, requiring companies to submit applications within ninety days of independent certification and detailing job creation and expenses. It allows for the transfer of tax credits with specific limitations and introduces penalties for fraudulent claims. The legislation also establishes a new workforce incentive program for employers hiring individuals with intellectual disabilities, providing grants based on the percentage of employees with disabilities. Overall, the bill aims to enhance economic growth and support R&D and production activities in Connecticut through clearer regulations and financial incentives, while repealing outdated provisions and introducing new definitions and thresholds for tax credits.

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