For this state of the month, we remain on the East Coast to focus on Connecticut. The “Nutmeg State” is the third smallest state according to land size, but its population is actually bigger than 20 other states. Connecticut’s strength lies in its versatile workforce that are skilled in the fields of financial services, bioscience, and even in entertainment.

 

Business Climate

Connecticut’s business environment is often associated with high business costs and poor economic climate due to the slow recovery from the recession. On the contrary, the state has bright spots in which collaboration among sectors developed a solid foundation for doing business.

Among the state’s key industries are insurance services, bioscience and digital media. The state has rightfully claimed to be one of the major insurance capitals of the world. In the US alone, the state has generated the most jobs in the industry, producing over $16 billion in payroll. Aetna, Inc., The Hartford, The Travelers Companies are just a few industry leaders to call Connecticut home. Accordingly, Connecticut is also one of the healthiest states in America. It has one of the lowest obesity rates and a high number of dentists and doctors per capita.

The State is also proud to have a network of production companies and technical support services. It has a collection of creative minds in digital animation and television entertainment. Creators of the notable Ice Age movie series, Blue Sky Studios reside in the state. Other members of Connecticut community include sports giants ESPN and World Wrestling Entertainment (WWE).

Bioscience is thriving under strong R&D partnerships with the state universities. These educational institutions help speed the progress to new cures and advanced treatment protocols. Connecticut is planning to grow its innovative bioscience industry with more than $1 billion in investments for the expansion of the University of Connecticut (UCONN) Medical Center and the development of the Jackson Laboratory Genome Research Facility, as well as a $200 million Bioscience Innovation Fund. The education system in Connecticut also includes Yale University, Wesleyan University, and United States Coast Guard Academy.

As mentioned, the ability of the state to provide quality insurance and healthcare alongside a highly educated workforce aid its business climate. The collaboration of a healthy populous and strong education institutions create a great quality of life for Connecticut.

Tax Climate

According to the Tax Foundation’s 2016 State Business Tax Climate Index, Connecticut sits at the bottom of the pack and ranks 44th out of 50 states. The State imposes corporate income tax with a flat rate of 9% which is the 5th highest among states that levy this type of tax. Connecticut’s state and local corporate income tax collections per person were $159 in 2013 which ranked 15th highest nationally.

Connecticut’s personal income tax consists of seven brackets with a bottom rate of 3% and a top rate of 6.99%. The State’s top rate was just recently increased from 6.7% in 2015. Connecticut’s top rate currently ranks 13th highest among states that levy an individual income tax. The State’s state and local income tax collections per person were $2,172 in 2013 which ranked 2nd highest in the nation.

Connecticut imposes relatively high tax rates across the board. In addition to its income tax system, the state has a 6.35% sales and use tax, above the 5.95% national median and has collected the 2nd most property taxes per person at $2,726. The cumulative tax collections across several fields is reflected in the state’s low ranking in the nation.

Tax Credits & Incentives

Enterprise Zone Tax Credit for Qualifying Corporations: Connecticut’s Department of Economic and Community Development (DECD) provides a tax credit to qualifying corporations that meet certain employment levels in designated Enterprise Zones. There are currently 17 Enterprise Zones in Connecticut which meet the minimum thresholds of 15% poverty rate, an unemployment rate that is at least 20% of the state average and at least 15% of the zone’s population receiving public assistance. Click here for a map of the Enterprise Zones.

  1. Newly formed corporations may qualify for 100% corporate tax credit for their first three taxable years and a 50% tax credit for the next seven taxable years. The corporation must have:
    • At least 375 employees – 40% of which are either zone residents or are residents of the municipality and who qualify for the Workforce Investment Act, or
    • Have less than 375 employees – 150 of which are zone residents or are residents of the municipality and who qualify for the Workforce Investment Act.
  1. Other benefits for corporations in the Enterprise Zones include a five-year, 80% abatement of local property taxes on qualifying real and personal property, and a ten-year, 25% credit on that portion of the state’s corporation business tax directly attributable to a business expansion or renovation project as determined by the Connecticut Department of Revenue Services.

Apprenticeship Tax Credit: This program provides a tax credit against corporate taxes to qualified businesses that employ apprentices who are receiving training in the manufacturing, plastics, plastics-related, or construction trades.

  1. In order to receive the credit, the business’s apprenticeship program must be certified in accordance with regulations adopted by the Connecticut Department of Labor (DOL); and registered with the Connecticut State Apprenticeship Council. In addition to these requirements, the apprenticeship program for the construction trade must last at least four years.
  1. A Qualifying apprenticeship training program means a program that meets the following requirements:
    • The apprenticeship period must be at least 4,000 hours (two years) but not more than 8,000 hours (four years); and
    • Each apprentice must be employed on a full-time basis, which is defined as working minimum of 120 hours per month.
  1. The tax credit amounts to the lesser of:
    • $6*, $4**, $2*** per hour multiplied by the total number of: 1) hours worked by the apprentice during the first half of a two-year qualifying apprenticeship training program, or 2) hours worked by the apprentice during the first three-quarters of a four-year qualifying apprenticeship training program;
    • 50% of the total wages paid to the apprentice during the: 1) first half of a two-year qualifying apprenticeship training program, or 2) first three-quarters of a four-year qualifying apprenticeship training program; or
    • $7,500*, $4,800**, $4,000*.

*Manufacturing Trade

**Plastic and Plastics-Related Trade

***Construction Trade

Random Facts

  • Connecticut and Rhode Island never ratified the 18th Amendment (Prohibition).
  • Connecticut is home to the oldest U.S. newspaper still being published: The Hartford Courant, established in 1764.
  • The first speed limit ever set was passed into law in Connecticut in 1901, a neck breaking limit of 12 miles per hour.
  • Connecticut was the first state to have permanent license plates, starting in 1937.
  • It’s illegal for a Hartford man to kiss his wife in public on a Sunday.
  • Cattle branding in the United States began in Connecticut when farmers were required by law to mark all of their pigs.
  • The first lollipop-making machine opened for business in New Haven in 1908. George Smith named the treat after a popular racehorse.
Business Climate Connecticut Tax Climate tax credit