Two tax proposals in the legislature’s Commerce Committee would provide a great boost to Connecticut’s manufacturers and other small and midsize businesses in Connecticut. 

  • SB 303 permits pass-through employers to take advantage of state research and development (R&D) tax credits
  • SB 420 extends the state’s apprenticeship tax credit to pass-through entities


Increasingly, businesses are being structured as S Corporations, Limited Liability Corporations, and Limited Liability Partnerships, collectively known as pass-through entities. These entities pay their business taxes through the personal income tax and are currently unable to use the Research and Development (R&D) tax credits that larger, C corporations, have had access to since the mid-1990s.

Research and development (R&D) is crucial to both the short-term vitality and the long-term health of any business—and Connecticut’s economy.

R&D leads to new products, additional uses of existing products, greater efficiency, enhanced job creation and retention, and the promise of continued growth. The R&D tax credit is the state’s primary tax policy fostering innovation and driving sustainable job growth.

But the R&D process is long and costly, which is why R&D tax credits are critical to locating such facilities—large and small--in the state:




R&D Cycle

Connecticut Manufacturing Cycle


7-15 years

7-8 years


5-20 years

30+ years


5-7 years

30+ years


As the personal income tax rate for investors and small employers has risen in years, so too has the need for credits to encourage investment in Connecticut. Extending the R&D tax credit to pass-through entities is both logical and necessary in order to keep the state’s small and midsize businesses so they can invest and expand in Connecticut.

Apprenticeship tax credit

Similarly, SB 420 extends the manufacturing apprenticeship tax credits to those same pass-through businesses.

Today there is a shortage of skilled manufacturing talent in Connecticut and many good jobs are going unfilled. With Connecticut’s aging manufacturing workforce population, the current shortage is even more problematic.

Many Connecticut businesses want to invest in training current and new employees, but lack the resources to do it. Extension of the apprenticeship tax credit will help them offer that critically important training, and in the process, begin to reduce Connecticut’s skilled manufacturing worker shortage.

Adoption of SB 420 would allow manufacturers that are pass-through entities to receive a credit against their personal income tax for certain dollars expended while training employees. The tax credit would pay for up to 50 percent of the cost of training employees — as much as $4,800 per employee (or 50% of actual wages paid during the first half of a two-year apprenticeship or first three-quarters of a four-year apprenticeship, whichever is less) — in an approved apprenticeship program. 

CBIA urges the Commerce Committee to adopt both of these positive legislative proposals.

For more information, contact CBIA’s Bonnie Stewart at 860.244.1925 | | @CBIAbonnie

Filed Under: Taxes

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