Connecticut State Tax Credits

More ways to save your hard-earned money from the tax man!

Connecticut has four great State Tax Credits for you.

Thank you so much for checking our resource out here for your state and congratulations for taking a proactive step to paying less in taxes. For your state, we have identified the tax credits that are currently being offered to help you pay less in state taxes.

We hope this resource is helpful to you, and if there is something you feel we have missed, please let us know!

It would be completely arrogant of us to think that we know all things and if we missed something we want to know so we can vet that and help you and our other friends in the entrepreneurial community pay less in taxes! And if you found this helpful, you should check out our DIY resources inside of our Tax Savings Communities (found at www.MakeTaxesFair.com/Our-Communities).

We're also ready to help you if you want to skip the line of the DIY process and get help directly from us. To learn more about how we help our clients check out www.MakeTaxesFair.com/Get-My-Roadmap

SEE ALL STATE TAX CREDITS
Connecticut

Scholarship Contributions Tax Credit

Overview:
The Connecticut Scholarship Contributions Tax Credit incentivizes businesses and individuals to financially support nonprofit youth development organizations that provide scholarships for income-qualified students attending private schools. Donors can earn a 50% state tax credit for approved contributions during the 2024 and 2025 tax years.

Who It’s For:
Connecticut corporations and individuals subject to the state’s Corporation Business Tax (Chapter 208) or Income Tax (Chapter 229) who want to fund scholarships for at-risk youth through certified nonprofit organizations.

Four Key Highlights:

  1. 50% Credit for Approved Contributions

    • Businesses can claim up to $100,000; individuals up to $20,000 per year.

    • Contributions must be made to qualified 501(c)(3) youth development organizations.

  2. Strict Pre-Approval Requirement

    • Must apply for and receive a tax credit reservation from OPM before making the contribution.

    • Contributions must be made within 120 days after approval.

  3. No Carryforward or Carryback

    • The tax credit must be claimed in the year the contribution is made—no extensions allowed.

  4. Certification and Documentation Needed

    • Donors must submit proof of contribution and an independent certification to receive a tax credit voucher, and attach it to the applicable tax return (e.g., Form CT-1120K).

 

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Student Loan Payment Tax Credit

Overview:
The Connecticut Student Loan Payment Tax Credit rewards employers who directly pay toward their employees’ education loans through CHESLA (Connecticut Higher Education Supplemental Loan Authority). Employers can claim a 50% credit against certain state taxes, promoting workforce retention while helping employees manage student debt.

Who It’s For:
Connecticut corporations (including small businesses) subject to the Insurance Companies and Health Care Centers Taxes (Chapter 207) or the Corporation Business Tax (Chapter 208) that employ full-time workers with qualifying CHESLA student loans.

Four Key Highlights:

  1. 50% Credit on Payments to CHESLA

    • Employers receive a 50% tax credit on direct loan payments made to CHESLA, capped at $2,625 per employee per year.

  2. Strict Employee and Employer Qualifications

    • Employees must be Connecticut residents, full-time workers (35+ hours/week), and recent bachelor’s graduates (within five years) with eligible CHESLA loans.

    • Owners or family members of owners do not qualify.

  3. No Carryforward or Carryback

    • The tax credit must be used in the year earned; any unused credit expires.

  4. Refund Option for Small Businesses

    • Businesses with gross receipts under $5 million can opt to receive a refund of the tax credit by filing Form CT-RSLP.

 

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Connecticut Angel Investor Tax Credit Program

Overview:
The Connecticut Angel Investor Tax Credit Program incentivizes individuals to invest in early-stage Connecticut startups by offering a 25% tax credit against state income tax. Managed by Connecticut Innovations, this program helps startups access critical early funding while rewarding accredited investors.

Who It’s For:
Accredited investors or groups of accredited investors looking to invest between $25,000 and $2 million in Qualified Connecticut Businesses (QCBs) seeking early-stage capital.

Four Key Highlights:

  1. 25% State Income Tax Credit

    • Investors receive a 25% credit of the investment amount when investing in a Qualified Connecticut Business.

  2. Strict Investor and Business Eligibility

    • Investors must be accredited and cannot control 50%+ of the business.

    • Businesses must have less than $1M in revenue, fewer than 25 employees (75% CT residents), and under seven years of operation.

  3. Pre-Investment Application Required

    • Investors must apply for a tax credit reservation number before making the investment through the Connecticut Innovations portal.

  4. Limits on Investments and Entities

    • Single business investment cap: $2 million.

    • Venture capital firms, banks, and financial institutions cannot participate.

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Connecticut Human Capital Investment Tax Credit

Overview:
The Connecticut Human Capital Investment Tax Credit rewards businesses for investing in workforce training, higher education partnerships, and childcare facility development. Expanded in 2024, the program now offers higher tax credits for contributions toward childcare, aiming to strengthen employee support and workforce skills.

Who It’s For:
Connecticut businesses subject to the Corporation Business Tax (Chapter 208) that invest in job training, workforce development, education, or childcare infrastructure for employees or the broader community.

Four Key Highlights:

  1. Two Tiered Credit Rates

    • 10% credit for investments in employee job training and higher education partnerships.

    • 25% credit for childcare-related investments like facility construction or employee childcare subsidies.

  2. Broad Range of Eligible Activities

    • Covers costs for training programs, college partnerships, work education, and childcare center development in Connecticut.

    • Travel for training (in-state only) is also eligible.

  3. Five-Year Carryforward Allowed

    • If the credit exceeds the business’s current tax liability, unused credits can be carried forward for up to five years.

    • No carrybacks permitted.

  4. Detailed Filing Requirements

    • Must submit Form CT-1120 HCIC attached to Form CT-1120K with all supporting schedules detailing qualifying expenditures.

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