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February 9, 2023

Here’s how Gov. Lamont’s $50.5B budget impacts business taxes, credits

STEPHEN BUSEMEYER / CT MIRROR Gov. Ned Lamont addresses a joint session of the Connecticut House and Senate as he presents his budget proposal for 2023-2024.
By Keith Phaneuf, CT Mirror, HBJ Staff

Gov. Ned Lamont’s two-year, $50.5 billion budget includes a number of changes to business taxes and tax credits. 

While the Democratic governor’s  budget includes more than $500 million in tax cuts, not all businesses will see relief. 

Before his budget reveal Wednesday, Lamont announced plans to pare back the pass-through entity tax, a levy created in 2018 to help business owners work around a new $10,000 cap on state and local tax deductions within the federal income tax system. 

This would save about 123,000 small and mid-sized businesses, collectively, as much as $60 million annually starting in 2024.

Lamont also hinted in December that he would allow the state’s corporation tax surcharge, which was supposed to expire this year, to sunset. However, his budget released on Wednesday keeps the surcharge in place until 2025, costing C-corp companies $130 million over two years. 

Other tax changes in the governor’s proposal include:

  • Boosting from 5% to 10% the business tax credit that encourages companies to invest in human capital, such as sponsoring new work education and training programs. The 5% credit would increase to 25% for spending to help employees with child-care expenses. These changes would cost the state roughly $3.5 million per year.
  • Repealing the recent expansion of the state’s angel investor tax credit program that benefits those who invest at least $25,000 in a qualified cannabis business. This would save the state $27.5 million over the next two fiscal years combined.
     

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