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Bill

HB 5319

AN ACT CONCERNING A RESEARCH AND DEVELOPMENT TAX CREDIT FOR SMALL BUSINESSES.

2026 Regular Session Introduced by Hector Arzeno and 6 co-sponsors

Connecticut proposes a targeted R&D tax credit for small businesses to incentivize innovation and potentially boost state competitiveness in technology-driven industries.

FAV. CHG. OF REF., SEN. TO COMM. ON Finance, Revenue and Bonding
#corporationbusinesstaxcreditsforresearchanddevelopmentexpenses #economicandcommunitydevelopment #departmentof #smallbusinesses
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Bill Summary · HB 5319

Legislative bill overview

HB 5319 proposes to establish a research and development (R&D) tax credit specifically for small businesses in Connecticut. The bill aims to incentivize innovation and technological advancement by allowing qualifying small businesses to reduce their tax liability based on eligible R&D expenditures. This represents a targeted tax incentive program focused on a specific business size category.

Why is this important

R&D tax credits can influence business investment decisions, potentially encouraging companies to conduct innovation activities within the state rather than relocating. For Connecticut's economy, this could affect job creation, talent retention, and competitiveness in knowledge-based industries. However, the actual economic impact depends heavily on credit size, eligibility criteria, and whether it attracts new activity or simply subsidizes existing spending.

Potential points of contention

  • Revenue cost vs. economic benefit: Critics may question whether the foregone tax revenue generates sufficient economic returns or simply reduces state revenue without measurable job creation
  • Definition of eligible R&D: Disputes could arise over what activities qualify (basic research, software development, incremental improvements, etc.), potentially favoring certain industries over others
  • "Small business" threshold: The specific revenue/employee limits defining "small" will determine program scope and could exclude businesses just above the threshold or create perverse incentives

Compiled from official sources — confirm details with the bill’s official record.

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