Human Capital Investment Tax Credit

Conn. Gen. Stat. §12-217x

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What’s New

Amendments to Tax Credit for Human Capital Investment

Legislation expands the scope of the tax credit to include donations or capital contributions to certain exempt organizations for the planning, site preparation, construction, renovation or acquisition of facilities in this state for establishing a childcare center in this state to be used by children residing in the community and increases the allowable tax credit. The legislation is effective January 1, 2024.

Description and Applicable Taxes

Beginning with income year 2024, the human capital investment tax credit increases from 5% of the amount paid or incurred for eligible investments to 10% for most eligible investments and 25% for childcare related investments. This tax credit may be applied against the tax imposed under Chapter 208 of the Connecticut General Statutes for expenditures made by a corporation for human capital investment.

Definitions

Human capital investment means:

• In-state job training of persons employed in Connecticut;
• Work education programs in Connecticut;
• Worker training and education of persons employed in Connecticut provided by Connecticut institutions of higher education;
• Donations or capital contributions to institutions of higher education in Connecticut for improvements or advancement of technology, including physical plant improvements;
• Planning, site preparation, construction, renovation, or acquisition of facilities in Connecticut for the purpose of establishing a child care center to be used primarily by the children of employees who are employed in Connecticut; 
• For income years beginning on or after January 1, 2024, donations or capital contributions to an organization exempt from taxation pursuant to IRC § 501(c)(3) for the planning, site preparation, construction, renovation or acquisition of facilities in this state for the purpose of establishing a child care center in this state to be used by children residing in the community, including the children of employees who are employed in this state;
• Child care subsidies paid to employees employed in Connecticut for child care provided in Connecticut; or
• Contributions made to the Individual Development Account Reserve Fund administered by the Connecticut Department of Labor.

Training is the instruction, maintenance, or improvement of the skills required by the employer for the proper performance of the employee’s duties that are conducted in Connecticut. /p>

Work education programs include but are not limited to programs in public high schools and work education-diversified occupation programs.

Expenditures associated with the “in-state job training of persons employed in Connecticut” include:

• Training materials;
• Direct expenses relating to training (e.g., the cost of a training instructor);
• Course registration fees; and
• Travel costs related to training, provided the travel is within Connecticut.

However, salaries, payroll taxes and fringe benefits earned by employees during training are not expenditures eligible for this tax credit.

Tax Credit Amount

Prior to income years beginning on or after January 1, 2024, the tax credit is equal to 5% of the amount paid or incurred by the corporation for a human capital investment. No corporation claiming this tax credit shall claim any other credit against any tax with respect to the same investment.

10% Tax Credit

For income years beginning on or after January 1, 2024, the tax credit is equal to 10% of the amount paid or incurred by the corporation for a human capital investment, for purposes such as:

• In-state job training of persons employed in Connecticut;
• Work education programs in Connecticut;
• Worker training and education of persons employed in Connecticut provided by Connecticut institutions of higher education;
• Donations or capital contributions to institutions of higher education in Connecticut for improvements or advancement of technology, including physical plant improvements; and
• Contributions made to the Individual Development Account Reserve Fund administered by the Connecticut Department of Labor.

25% Tax Credit

For income years beginning on or after January 1, 2024, the tax credit is equal to 25% of the amount paid or incurred by the corporation for a human capital investment, for purposes such as:

• Planning, site preparation, construction, renovation, or acquisition of facilities in Connecticut for the purpose of establishing a child care center to be used primarily by the children of employees who are employed in Connecticut;
• Donations or capital contributions to an organization exempt from taxation pursuant to IRC § 501(c)(3) for the planning, site preparation, construction, renovation or acquisition of facilities in this state for the purpose of establishing a child care center in this state to be used by children residing in the community, including the children of employees who are employed in this state; and
• Child care subsidies paid to employees employed in Connecticut for child care provided in Connecticut.

Carryforward and Carryback Limitations

Any tax credit not used during the income year may be carried forward to the next five succeeding income years until the entire credit is used. No carryback is allowed.

How to Claim the Tax Credit

Complete Form CT-1120 HCIC, Human Capital Investment Tax Credit, and attach it to Form CT-1120K, Business Tax Credit Summary, along with all required detailed schedules.

Where to Get Additional Information

Direct inquiries to:

Connecticut Department of Revenue Services
450 Columbus Boulevard
Hartford CT 06103

800-382-9463 (Connecticut calls outside the Greater Hartford calling area only), or
860-297-5962 (from anywhere)

Statutory and Regulatory References

Conn. Gen. Stat. §12-217x

Last updated February 6, 2024