Connecticut R&D Tax Credit Summary

Connecticut R&D tax credit, R&D tax credit

Connecticut State R&D Expenses Tax Credit

Refundable Tax Credit – Yes*

  • A credit against the corporation business tax is allowed for research and development expenditures deductible under IRC § 174 and for basic research payments deductible under IRC § 41
  • Expenditures funded by grant, contract, or otherwise by a person or governmental entity other than another corporation included in a combined return do not qualify for the credit
  • A corporation must reduce this credit by the amount of any incremental credits taken under Conn. Gen. Stat. §12-217j or any credits for grants to higher educational institutions taken under Conn. Gen. Stat. §12-217l
  • A qualified small business that cannot take the credit in a particular year because no tax is owed can either carry the credit forward or can apply to the Commissioner to exchange the credit for a credit refund equal to 65% of the value of the credit*

The amount of the credit is based on the amount of qualified research and development expenditures in Connecticut, as follows:

  • $50 million or under, 1%
    • Over $50 million but not over $100 million, $500,000 plus 2% of the excess over $50 million
    • Over $100 million but not over $200 million, $1.5 million plus 4% of the excess over $100 million
    • Over $200 million, $5.5 million plus 6% of the excess over $200 million

An exception is made for a qualified small business, which is allowed a tentative credit equal to 6% of research and development expenses. For such purposes, a qualified small business is a company with a gross income for the previous income year that does not exceed $100 million and that has not met the gross income test through transactions with a related person.

Carryforward

Amounts in excess of these limits can be carried forward until used. The carryforward credits must be taken in the order in which they were allowed. No carryback is allowed.

Flow Through Entity

A tax credit may be applied against the tax imposed under Chapter 208 of the Connecticut General Statutes for the incremental increase in research and experimental expenditures conducted in Connecticut. S Corporations are exempt from the tax imposed under this chapter.

How to obtain the credit?

Form CT-1120 RDC must be completed and attached to Form CT-1120K. In addition, the following must be attached to Form CT-1120 RDC:

  • A full and complete description of the nature of the research projects conducted by the company during the income year and the locations where conducted
  • A description of the methods used to obtain the total expenditures and payments for research and experimentation and basic research conducted in Connecticut
  • A description of each source of information used to compute the credit, including the methods and calculations of expense allocation if any and the job title
  • Description of each employee whose wages are included in the research expenditures

Find out if you qualify for the R&D tax credit

 

SELL YOUR NOL’s AND R&D CREDITS

If your company hasn’t considered the R&D credit in the past because you have net operating losses (NOLs) and could not utilize the credit contact us today to find out which states allow you to sell your credits and losses for up to 95 cents on the dollar. Also, qualified start-up companies can now take a credit on their payroll taxes for their R&D credit, allowing your company to utilize the R&D credit immediately, even if your company does not have taxable income.
FIND OUT MORE TODAY

 

States Offering R&D Credit:

                             States Without R&D Credit

Alabama
District of Columbia
Missouri
Montana
Nevada
Oklahoma
South Dakota
Tennessee
Washington
West Virginia
Wyoming