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State and Local Tax

Connecticut Extends NOL Carryforwards, Amends Other State and Local Taxes

Patricia M. McDermott, Esq.  

· 5 minute read

Patricia M. McDermott, Esq.  

· 5 minute read

Connecticut Governor Ned Lamont has signed legislation extending to 30 years the net operating loss (NOL) carryforward deduction and modifying various provisions related to state and municipal tax administration. (L. 2024, H5524 (Act 24-151), effective 06/06/2024, or as noted.)

NOL deductions.

The legislation extends from 20 to 30 income years the period when corporations may carry forward an NOL deduction for corporation business tax purposes for NOLs incurred in income years starting on or after January 1, 2025.

Combined reporting.

Effective January 1, 2025, certain combined groups meeting specified qualifications are allowed to deduct, over a 30-year period, the amount necessary to offset the increase in the valuation allowance against NOLs and tax credits in Connecticut that resulted from the state’s shift to combined reporting.

Withholding for retirement income distributions.

Effective January 1, 2025, and applicable to taxable years commencing on or after January 1, 2025, the legislation allows, rather than requires, income tax withholding for certain retirement income distributions and changes the methods for determining the amount of tax withheld from these distributions.

JobsCT tax rebate program.

Under the JobsCT tax rebate program, companies in the finance, insurance, manufacturing, clean energy, bioscience, technology, digital media, or similar industries may earn rebates against the insurance premiums, corporation business, and pass-through entity taxes for reaching certain job creation targets. The legislation decreases from 25 to 15 the number of new full-time equivalent employees (FTEs) that a business must create and maintain to be eligible for the JobsCT rebate program if at least three of the FTEs live in a concentrated poverty census tract. Additionally, the business is allowed to earn an additional rebate amount for each FTE who lives in one of these tracts.

Historic home rehabilitation tax credit.

Effective July 1, 2024, and applicable to taxable and income years commencing on or after January 1, 2024, the legislation restores taxpayers’ ability to claim the historic homes rehabilitation tax credit against certain business taxes in the 2024 tax year and all following years. All taxpayers are allowed to apply credits issued after January 1, 2024, against the unrelated business income tax.

Property tax exemption for farm machinery and buildings.

The cap on the local option property tax exemption for farm machinery is increased from $100,000 to $250,000 in assessed value. The cap on buildings used actually and exclusively for farming or for any building used to provide housing for seasonal employees is increased from $100,000 to $500,000 in assessed value.

Local option homestead exemption.

Municipalities are allowed to provide a property tax exemption of not less than 5% and not more than 35% of the assessed value for owner-occupied dwellings, including condominiums and units in a common interest community, that are the primary residences of the owners and consist of not more than two units.

Property tax exemption filing deadlines.

Effective July 1, 2024, taxpayers in the municipalities of Litchfield, Manchester, Meriden, Middletown, Thomaston, Waterbury, and West Haven can claim certain property tax exemptions even though they missed the filing deadline to claim the exemption or provide required documentation.

Revaluation delays.

The towns of Stratford and Derby, with each legislative body’s approval, are allowed to delay a revaluation scheduled for 2024 to the 2025 assessment year.

Redding special taxing district.

The town of Redding and all its receipts, revenues, income and real and personal property will be exempt from taxes and benefit assessments imposed by a special taxing district located in the town and will not be required to pay any tax, fee, rent, excise or assessment to the district.

Assessment appeals brought before superior court.

Effective July 1, 2024, the legislation establishes conditions under which certain people who filed a property tax assessment appeal with the Connecticut Superior Court from July 1, 2022, but before July 1, 2024, and had their appeal dismissed, may bring another appeal application to the court.

Insurance premiums tax reaudits and reassessments.

The DRS Commissioner is authorized to reaudit insurance premiums tax returns and impose more than one deficiency assessment, subject to the same requirements that apply to audits and assessments under existing law.

Insurance premiums tax returns for nonresident/foreign companies.

The legislation extends from 45 days after being initially licensed to do business in Connecticut to 90 days after this date, the due date for newly licensed nonresident- and foreign-licensed insurance companies to remit their initial 5-year return to DRS.

Technical changes.

The legislation makes technical and conforming changes to various tax statutes.


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