Connecticut ~ Corporate, Personal Income Taxes: Manufacturing Apprenticeship Credit Expanded to Pass-Through Entity Owners and Other Personal Income Taxpayers

The Connecticut General Assembly has overridden Gov. Dannel P. Malloy’s veto of legislation that expands the manufacturing apprenticeship tax credit to personal income taxpayers. The credit currently applies only against the corporation business tax. The credit equals $6.00 per hour, up to the lesser of $7,500 or 50% of the actual apprentice wages. The period for claiming the credit depends on the apprenticeship program’s duration. The period is the first year for a two-year program and first three years for a four-year program.

If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, the legislation allows the owners and partners to claim the credit. Pass-through entities eligible for the credit may no longer sell, assign, or transfer the credit to other taxpayers to corporations, utility companies, or petroleum products distribution companies. The credit may not be claimed against personal income withholding tax liability. The changes to the manufacturing apprenticeship credit are effective July 1, 2017 and applicable to income or taxable years beginning on or after January 1, 2017.

Finally, the legislation shifts, from the Department of Economic and Community Development (DECD) to the Program Review and Investigation Committee (PRI), the responsibility for preparing the three-year evaluation of the state’s economic development tax incentives, reduces the report’s scope, and requires the General Assembly’s appropriations and finance committees to hold hearings on the report.

Act 16-183 (H.B. 5636), Laws 2016, effective June 20, 2016 and as noted

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