Connecticut R&D Tax Credit Explained for Businesses

Connecticut and the R&D Tax Credit

State Credit Name: Research and Experimental Expenditures Tax Credit

Expiration Date: Indefinite

Who Can Apply? Corporations and flow-through entities

Credit Carry Forward: Unlimited carry forward for the Non-Incremental credit. 15 year carry forward for the Incremental Credit. There is a mandatory carry forward of of 2/3 of the credit received in the tax year. No carry back.

Are you eligible?

Why choose us?

Pass an Audit?

Special Notes:
The Incremental Method: 20% of the amount spent by the corporation directly on Connecticut research and experimentation expenditures that exceed expenses in the previous years.

Non-Incremental Method: Businesses with a gross income of less than $100 million from the previous year can take 6% of QRE’s. Large companies are eligible for a graduated percentage. If a company is in an enterprise zone, they can choose to use 3.5%.

Taxpayers can elect both the Incremental and the Non-Incremental methods in a tax year. Taxpayers with a gross revenue of less than $70 million may elect to receive a refund of 65% of unused credits. The credit used in one year is limited to 1/3 of the current year credit received.

Find out more

Swanson Reed is one of the only companies in the United States to exclusively focus on R&D tax credit preparation. Swanson Reed’s office location at 1000 Lafayette Boulevard, Bridgeport, Connecticut provides R&D tax credit consulting and advisory services to Bridgeport, New Haven, Stamford, Hartford, Waterbury, Norwalk, Danbury, New Britain, Bristol and Meriden.

If you have any questions or need further assistance, please call or email our local Connecticut Partner on (203) 680-9655.
Feel free to book a quick teleconference with one of our Connecticut R&D tax credit specialists at a time that is convenient for you. Click here for more information about R&D tax credit management and implementation.

Schedule a Teleconference

Connecticut R&D Tax Credit Filing Instructions

To claim the Research and Development (R&D) tax credit in Connecticut, businesses must generally engage in qualified research activities within the state, which align with federal R&D definitions. Connecticut offers both incremental and non-incremental R&D tax credits for corporate income tax. Eligible expenses typically include wages for employees directly involved in R&D, costs for supplies used in research, and payments to third parties for qualified research. Businesses can claim a portion of their tentative tax credit when filing their annual corporate income tax return. For the primary claim of the Research and Development Expenditures Tax Credit, businesses must file Form CT-1120 RDC, “Research and Development Expenditures Tax Credit,” with the Connecticut Department of Revenue Services (DRS). Additionally, some businesses, particularly qualified small businesses, may be able to exchange unused credits for a refund by filing Form CT-1120 XCH, “Application for Exchange of Research and Development or Research and Experimental Expenditures Tax Credits by a Qualified Small Business.” It’s crucial to attach detailed schedules identifying the type, amount, and Connecticut location of the R&D expenses.

R&D Tax Credit Training for CT CPAs

directive for LBI taxpayers

Upcoming Webinar

R&D Tax Credit Training for CT CFPs

Upcoming Webinar

R&D Tax Credit Training for CT SMBs

water flows 521093561 300x200

Upcoming Webinar

Connecticut Patent of the Year – 2024/2025

Aeromics Inc. has been awarded the 2024/2025 Patent of the Year for a breakthrough approach to stroke recovery. Their invention, detailed in U.S. Patent No. 11873266, titled ‘Methods of treating or controlling cytotoxic cerebral edema consequent to an ischemic stroke’, introduces a targeted method to reduce brain swelling and improve survival chances after stroke.

The patented therapy works by blocking a specific water channel in the brain known to cause swelling after a stroke. This targeted method directly addresses cytotoxic cerebral edema, a life-threatening condition where brain cells swell rapidly due to lack of oxygen. Aeromics’ approach prevents excess water from flooding brain tissue, reducing damage and helping patients recover more fully.

Unlike current treatments that offer limited protection or come with major side effects, this method uses a selective compound to intervene early and safely. It opens the door to a new class of neuroprotective drugs that can be administered in emergency settings.

This innovation could transform how stroke is treated in hospitals worldwide. By reducing swelling, doctors may be able to buy more time, preserve brain function, and save lives. The technology also has potential to impact related conditions like traumatic brain injury, making it a vital development in critical care medicine.

With this award-winning patent, Aeromics Inc. is redefining stroke treatment and offering new hope to patients and clinicians alike.