Lamont Highlights R&D Tax Credit Expansion

Walk across the shop floor at Burke Aerospace in Farmington and you’ll see decades of innovation.

Each machine and piece of equipment reflects the aerospace manufacturer’s investment and growth over the years.

“You want to know where job growth is? You want to know where innovation is?” Gov. Ned Lamont said during an April 7 news conference.

“It’s at companies like this.”

Lamont’s budget proposal aims to make it easier for small businesses like Burke to invest in research and development.

Tax Credit

His budget proposal—SB 84—calls for expanding the state’s R&D tax credit to pass-through entities.

“I was, frankly, surprised to learn that this tax credit wasn’t extended to every entity,” said Connecticut Department of Economic and Community Development commissioner Dan O’Keefe.

“Anything we do to help generate more small business, entrepreneurship, and growth, that’s what it means.”

Gov. Ned Lamont

“Extending this the way the governor has proposed will allow many of those most innovative companies to take advantage.”

Lamont, O’Keefe, and other state and business leaders toured Burke Aerospace during the event, getting a firsthand look at how critical R&D is to the company’s operations.

“Anything we do to help generate more small business, entrepreneurship, and growth, that’s what it means,” Lamont said.

‘Essential for Survival’

For businesses like Burke, the R&D tax credit will help them better compete with larger companies.

“Innovation isn’t just part of our strategy, it’s essential for our survival and growth,” said Burke Aerospace president and CEO Brittany Isherwood.

Isherwood—who serves on the boards of CBIA and CONNSTEP—said the company plans to grow its workforce by 17% this year and invest millions in new equipment and technology at its Farmington facility.

“These incentives directly influence decisions about where we expand, where we hire, and how we invest,” she said.

The credit typically ranges from 1% to 6% of qualifying R&D expenditures, depending on factors like company size.

The governor’s proposal allows pass-through entities to claim a 6% tax credit for qualifying R&D expenditures.

“R&D takes a little while,” Lamont said. “You don’t get immediate cash flow back on it.”

“Anything you do to help a smaller company that is really focused on cash flow make a difference, that’s what we do.”

Supporting Small Business

CBIA president and CEO Chris DiPentima noted that Connecticut’s R&D tax credit is one of the strongest in the country, leading to the seventh-best R&D spend per capita.

He also highlighted Department of Revenue Services data that Connecticut earns $2.36 for every dollar claimed under the tax credit.

DiPentima said expanding the credit will help create thousands of jobs—giving companies incentives to invest in Connecticut.

“If we want companies to invent, build and scale here in Connecticut, we need to support how our businesses operate.”

CBIA’s Chris DiPentima

“Many of our manufacturers have locations in other states,” he said. “If we want companies to invent, build and scale here in Connecticut, we need to support how our businesses operate.”

“Strengthening and maintaining these programs, signals that that Connecticut is committed to supporting small businesses across the state,” said Isherwood.

The General Assembly’s Finance, Revenue, and Bonding Committee approved SB 84 March 31 sending it to the full Senate.

A similar proposal—HB 5319—was unanimously approved by the Commerce Committee.