AN ACT CONCERNING A RESEARCH AND DEVELOPMENT EXPENSES TAX CREDIT FOR PASS-THROUGH ENTITIES.

HB 7008 establishes a 6% tax credit for research and development (R&D) expenses paid by businesses structured as S corporations, partnerships, or single-member LLCs (pass-through entities) in Connecticut. Owners, shareholders, or partners of these businesses can claim the credit on their personal income taxes, based on qualifying R&D costs that meet federal criteria and are conducted within Connecticut. The credit is capped at $5 million annually to limit state revenue impact, and applies to tax years beginning January 1, 2026. This credit does not apply against withholding tax and aligns with existing state R&D expense definitions.