Connecticut Tax Incentives for New Businesses

Starting a business in Connecticut? Whether you’re seeking accounting services in Connecticut or exploring opportunities for growth, you’ll be glad to know that the state offers a variety of tax incentives designed to help new businesses thrive. Connecticut’s incentives are geared towards attracting investment, expanding businesses, and creating jobs. In this post, we’ll walk through the key tax incentives available to businesses in Connecticut as of 2025.

1. Enterprise Zone Benefits

For businesses located in designated distressed municipalities or urban enterprise zones, Connecticut provides some very attractive tax benefits. These incentives aim to drive economic revitalization and job creation in underdeveloped areas.

Key Benefits:

• Property Tax Abatement: 80% abatement on qualified real estate and personal property improvements for up to five years. 
• Corporate Business Tax Credit: 25% credit on corporate business tax attributable to the facility within the zone for up to ten years. 

These benefits are designed to foster economic growth in areas that need it most.

2. Urban and Industrial Site Reinvestment Tax Credit

This program encourages significant investments in urban and industrial properties, which can have a transformative effect on local economies.

Key Features:

• Projects investing at least $5 million in distressed communities, or $50 million elsewhere, are eligible. 
• Businesses may receive tax credits covering up to 100% of approved investments over a 10-year period. 

This credit is a powerful incentive for businesses looking to invest in Connecticut’s urban renewal efforts.

3. Manufacturing Assistance Act (MAA) Tax Incentives

If you’re running a manufacturing, distribution, or logistics business, Connecticut’s MAA offers various incentives that support business expansion and job growth.

Key Features:

• The MAA includes grants, low-interest loans, and tax exemptions on certain property improvements. 
• It’s specifically designed to help manufacturers expand their facilities and create jobs in Connecticut. 

This is one of the most robust support programs for manufacturers in the state.

4. Historic Preservation Tax Credits

Do you own or plan to purchase a historic property in Connecticut? If so, the Historic Preservation Tax Credit could be a valuable resource for your business.

Key Benefits:

• A 25% credit is available for qualified rehabilitation expenses on certified historic buildings used commercially or for mixed-use development. 
• The credit increases to 30% if residential mixed-use is included. 
• Federal historic tax credits of 20% are also available for qualified projects. 

This program is ideal for businesses looking to renovate historic properties and use them for commercial purposes.

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5. Brownfield Remediation Tax Incentives

Environmental cleanup can be expensive, but Connecticut offers tax incentives to help businesses offset some of these costs.

Key Benefits:

• Grants covering up to 50% of eligible environmental remediation expenses. 
• Property tax abatements and credits related to cleanup activities. 
• Sales and use tax exemptions apply to remediation costs. 

These incentives can make it easier for businesses to rehabilitate environmentally contaminated properties.

6. Angel Investor Tax Credit Program

Connecticut is committed to helping startups by offering a tax credit program designed to incentivize investment in new businesses.

Key Features:

• Investors who contribute between $25,000 and $2 million in qualifying Connecticut startups are eligible for a 25% state income tax credit. 
• The maximum annual tax credit available is $5 million, with a total program cap of $20 million. 
• Priority is given to businesses that are veteran-owned, women-owned, minority-owned, or disability-owned. 

This program runs through June 30, 2028, and provides a significant incentive for angel investors.

7. Digital Animation Production Company Tax Credit

If your business is involved in digital animation production, Connecticut offers an exciting tax credit for qualified expenses.

Key Benefits:

• Tax credit of between 10% and 30% on qualified production expenses. 
• Applicable to companies that maintain studio facilities and employ at least 200 full-time employees in Connecticut. 

This program is perfect for businesses in the digital animation field.

8. Scholarship Contributions Tax Credit

If your business is interested in supporting education, you can benefit from the Scholarship Contributions Tax Credit.

Key Features:

• Businesses can claim a 50% credit of their donations to approved nonprofit scholarship organizations. 
• This program supports income-qualified elementary students attending private schools. 

It’s an excellent opportunity for businesses to support education while benefiting from tax credits.

9. Student Loan Payment Tax Credit

Connecticut also offers a tax credit for employers who help their employees pay off student loans.

Key Benefits:

• Employers who make student loan payments on behalf of eligible employees can claim a 50% credit on the payment amount. 
• Eligible employees must be Connecticut residents who earned a bachelor’s degree from a Connecticut institution within the past five years. 

This credit provides a great way for businesses to support their employees and attract top talent.

Legislative and Budget Proposals Affecting Incentives (2025)

As of 2025, several proposals may affect the existing tax incentives available to businesses in Connecticut:

• The 10% corporate tax surcharge is proposed to be extended through 2028. 
• The capital base tax phase-out is being accelerated and is expected to end by January 1, 2026. 
• The $2.5 million combined unitary reporting cap could be eliminated, potentially increasing tax liabilities for large multistate corporations. 
• A Commercial-to-Residential Conversion Tax Credit may be introduced for projects that convert commercial or industrial buildings into affordable housing properties. 

It’s important to stay updated on legislative changes that may impact your business.

Summary

Connecticut offers a wide range of tax incentives that can help new businesses save money, expand, and create jobs. From property tax abatements to angel investor credits and historic preservation incentives, there are plenty of opportunities for businesses to take advantage of in 2025. If you’re starting a business in Connecticut, these incentives can play a critical role in your success, so it’s worth taking the time to explore your options. Always check with official sources for the latest information and deadlines to ensure you’re making the most of these valuable programs.

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