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Credit Percentage

Research and Experimental (Incremental) Expenditures Credit

The credit percentage is 20% of the excess of research and experimental expenditures in Connecticut in the current income year over research and experimental expenditures in Connecticut in the preceding income year.


A credit may be applied against the Connecticut corporation business tax for the incremental increase in research and experimental expenditures conducted in Connecticut.

Research and experimental expenditures as defined in Section 174 of the Internal Revenue Code of 1986, as amended, include but are not limited to:

  • Expenditures incurred in connection with the taxpayer’s trade or business that represent research and development costs in the experimental or laboratory sense;

  • All costs incident to the development or improvement of a product, including any pilot model, process, formula, invention, technique, patent, or similar property. The product can be used by the corporation in its trade or business or can be held for sale, lease, or license; or

  • Costs of obtaining a patent, such as attorneys’ fees expended in making and perfecting a patent application.

The following are examples of expenses that do not qualify:

  • Overhead and other expenses, such as general and administrative expenses, that relate to a corporation’s activities as a whole and do not contribute directly to the research and development effort; or

  • The ordinary testing or inspection of materials or products for quality control, for efficiency surveys, management studies, consumer surveys, advertising or promotions, for research in connection with literary, historical, or similar projects and the costs of acquiring another’s patent, model, production, or process.

How to Compute the Credit

The amount of the credit is equal to 20% of the amount spent on research and experimental expenditures conducted in Connecticut during the income year that exceeds the amount spent on research and experimental expenditures conducted in Connecticut during the preceding income year. The credit amount reported on Form CT-1120RC, Research and Experimental Expenditures Credit, must be entered on Form CT-1120K, Business Tax Credit Summary.

Carryforward/Carryback Limitations

Corporations are allowed a 15-year credit carryforward to each successive year until the credits are fully taken. Previously, only biotechnology companies were allowed a 15-year carryforward. No carryback is allowed.

How to Apply

Complete Form CT-1120RC and attach it to Form CT-1120K.

Forms are available anytime from the DRS website at www.ct.gov/DRS or by calling the DRS Forms Unit at 1-800-382-9463 (Connecticut calls outside the Greater Hartford calling area only) and selecting Option 2 from a touch-tone phone, or 860-297-4753 (from anywhere).

TTY, TDD, and Text Telephone users only may transmit inquiries anytime by calling 860-297-4911.

Informational Publication 2006(15), Guide to Connecticut Business Tax Credits Issued: 04/24/07


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