The state legislature recently extended a helping hand to manufacturers, who could now be eligible for a 100 percent tax credit on funds they set aside for future business investments.
In 2010, Connecticut was the first state to establish a Manufacturing Reinvestment Account, allowing businesses to receive a tax credit if they put a portion of their revenues into a savings account to use for future expenditures like facility expansions and equipment purchases. Those accounts, however, received little use because they only allowed for a 50 percent tax reduction.
Under newly passed legislation, which awaits Gov. Dannel P. Malloy’s signature, manufacturers can receive a 100 percent tax reduction starting July 1. The new law does reduce the number of participating companies from 100 to 50, but it opens up the program to firms with up to 150 employees, instead of just the 50 employees previously allowed.
The New Haven Manufacturers Association estimates a business may save $31,000 in taxes if it sets aside the maximum $100,000 annually for five years.
In other tax news, the U.S. Senate prevented a vote on a bill that would have extended through 2015 a 20 percent tax credit and a 14 percent amplifier credit on research and development. Connecticut companies that have used the credits in the past include United Technologies Corp., Northrop Grumman, and General Electric.
The tax credit bill, which had bipartisan support in committee, failed to come to a vote because Republicans and Democrats disagreed on Senate procedures for passing the bill. The measure could come to a vote again before the end of the year, said U.S. Sen. Chris Murphy (D-CT).
— Brad Kane
