What is Connecticut's R&D tax credit rate?

The RC credit under Conn. Gen. Stat. 12-217j is 20 percent of the increase in your qualified research expenses over the prior year. It is the incremental piece, structurally like the federal Regular credit but at a higher rate.

The RDC credit under 12-217n is non-incremental: it applies to Connecticut research spending net of the amount used for the 20 percent credit. The rate is a flat 6 percent for a company with prior-year gross income of $100 million or less; larger companies fall into tiers from 1 to 6 percent. The two coordinate so you do not double-count, because expenses used in the RC computation reduce the RDC base for the same year. Each credit works on a different slice of your spending.

A company with prior-year gross income of $70 million or less and no Connecticut corporation business tax liability can exchange its current-year R&D credits for cash worth 65 percent of the credit amount. For a biotechnology company, Public Act 25-168 raised that to 90 percent for income years beginning on or after January 1, 2025. A $1.5 million annual cap applies.

For a pre-profit Connecticut software company, the practical pattern is to compute both credits, claim them on Forms CT-1120 RC and CT-1120 RDC, and elect the cash exchange rather than carrying the credit forward.

Public Act 26-68, section 267 (signed May 26, 2026), adds a 6 percent R&D credit against the personal income tax for S corporations and partnerships with gross income of $70 million or less, for tax years beginning on or after January 1, 2026.

The business reserves the credit in advance through a Department of Economic and Community Development voucher. The limit is $1.5 million per business and $25 million statewide, and the credit can be exchanged at 65 percent of its value, or 90 percent for biotechnology companies.

Only research conducted in Connecticut counts. The Connecticut qualified research expense definition follows federal Section 41, so the wages, contract research, and supplies that support your federal claim also support the Connecticut credit, limited to the in-state portion.

Unused credit that you do not exchange for cash carries forward. Credits earned in income years beginning on or after January 1, 2021 carry forward 15 years; older credits carry forward until used.

• Connecticut's R&D credit (full overview)
• Connecticut vs the federal credit
• Connecticut R&D credit refund
• The Section 41 four-part test
• What is a qualified research expense (QRE)?
• Form 6765 and Section G
• Delaware R&D credit
• Iowa R&D credit

• Connecticut DRS, Research and Development Nonincremental Expenses Tax Credit guidance (Conn. Gen. Stat. 12-217j and 12-217n) - Connecticut Department of Revenue Services
• Connecticut Form CT-1120 RDC (2025) - Connecticut Department of Revenue Services
• Connecticut General Statutes chapter 208 (2026 supplement), including 12-217j, 12-217n and 12-217ee - Connecticut General Assembly
• Connecticut Public Act 26-68, section 267 (R&D credit for S corporations and partnerships) - Connecticut General Assembly
• Connecticut Form CT-1120 XCH (Rev. 12/25), research and development credit exchange - Connecticut Department of Revenue Services
• Aprio: State R&D tax credits, recent updates and impacts (August 18, 2025) - Aprio
• CBIZ: Connecticut bill expands R&D credit (July 15, 2026) - CBIZ
• 26 U.S.C. § 41 (credit for increasing research activities) - Cornell Law School, Legal Information Institute