Connecticut: Business tax provisions revised in supplemental legislation

Connecticut: Business tax provisions revised

The governor today signed legislation that revises certain business-related tax changes as originally included in Connecticut’s budget bill in early June 2015.


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Connecticut lawmakers on June 3, 2015, approved a two-year budget bill that included significant tax changes affecting business taxpayers—including certain retroactive tax provisions. Almost immediately, amid reports that certain Connecticut-headquartered companies were considering leaving the state, a special legislative session was held to address some of the changes in the budget bill.

New legislation

The governor today signed House Bill 7061 and an “implementer bill” (House Bill 1502) to revise certain tax provisions in the budget bill. Among the changes:

  • The new legislation delays the effective date of mandatory unitary combined reporting, to income years beginning on or after January 1, 2016, and makes corresponding changes to reflect the delayed effective date.
  • The legislation also revises the rules for determining which members are included in a “water’s edge” combined group.
  • The legislation amends the implications of the mandatory unitary combined reporting changes on the interest addback rules.
  • Concerning net operating losses (NOLs), an alternative limit is provided for corporations that are part of a combined group with over $6 billion in unused NOLs from tax years prior to 2013.
  • A phased-in increase in the sales and use tax rate applicable to computer and data processing services is repealed. The rate will continue to be 1%. Also, “web-based services” are subject to the sales and use tax as computer and processing services as of October 1, 2015.
Read a  June 2015 report [PDF 155 KB] prepared by KPMG LLP:  Connecticut governor signs budget and supplemental legislation on June 30, 2015

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