Manufacturing in Connecticut: Explore Grant, Tax Incentive Opportunities

Connecticut is known for its strong manufacturing industry, with a long history of producing quality products and providing skilled jobs to residents. The industry has played a critical role in the state's economy for many years and continues to be a vital sector.

To help further grow the industry, the Connecticut Office of Manufacturing — a state agency dedicated to promoting and supporting manufacturing in Connecticut — offers a variety of incentive programs. Consider how the office’s top three programs could help your manufacturing company.

Manufacturing Innovation Fund Voucher Program

The Manufacturing Innovation Fund Voucher Program (MVP) provides funding for new equipment and projects to help companies become more efficient, productive, and competitive. The program provides funding for 33% of project costs for first-time applicants and 25% for repeat applicants, up to $100,000 lifetime total.

Eligible companies can apply for a grant up to $100,000 to conduct a new project. First-time applicants must provide 67% of the total proposed project cost and repeat applicants must provide 75%.

Read the MVP application and funding use details to review eligibility and required documentation needed for this program.

Incumbent Worker Training Program

The Incumbent Worker Training (IWT) Program offers matching grants to manufacturing companies for upskilling employees. The goals are:

• Supporting advanced manufacturing and innovative companies in training workers in the skills to meet current and emerging market needs.
• Bringing technological innovation to the market and helping manufacturing companies increase productivity and efficiency by enhancing the skills of their current workforce.
• Growing sales revenue and increasing profitability.

The program reimburses up to $50,000 of training costs annually. Companies may submit multiple applications if the aggregate amount does not exceed $50,000 in any given calendar year. There is a $100,000 lifetime maximum per company.

As an example, a company with $30,000 in training costs is eligible for a potential grant of $15,000 (i.e., $15,000 company spending on training is matched with a $15,000 IWT Program grant). Review the Incumbent Working Training application for eligibility and funding details along with the required documentation needed for this program.

CONNEX Marketplace

CONNEX Connecticut is an online platform connecting U.S. manufacturers and suppliers with a single searchable supply chain tool. You can use CONNEX to:

• Find suppliers — Search for qualified domestic suppliers offering the products, services, and manufacturing capabilities you need.
• Network for growth — Participate in purchasing events, matchmaking sessions, and industry forums that can help grow your domestic supplier base.
• Find new buyers — Learn manufacturers’ needs and respond to their requests for information, qualifications, and proposals. Also, create a profile explaining your company’s products and capabilities.

Get the details on the CONNEX supply chain tool and its functionality.

Tax Incentives

Connecticut also provides the manufacturing industry with tax credits to mitigate the industry’s Connecticut tax liabilities. Connecticut manufacturers should assure they are taking advantage of the following tax credits, some of which must be applied for and approved in advance.

• Apprenticeship Training Credit: Earned for employing, within Connecticut, apprentices in the manufacturing, plastics, or construction trades. The tax credit is generally computed based on the hours worked by the apprentice or the apprentice’s wages. The Connecticut Department of Labor administers the application process and the credit.
• Human Capital Investment Credit: Earned for expenditures related to Connecticut job training, work education programs, contributions to educational organizations related to the advancement of technology, establishing a day care facility and child-care subsidies. The tax credit is 5% to 25% of the expenditures.
• JobsCT Tax Rebate Program: Earned for reaching certain job creation targets in Connecticut (i.e., create and maintain at least 25 new full-time equivalent employees (“FTEs”)). The rebate, allowed against taxes, is based on (1) the number of FTEs the business creates and maintains, (2) the FTEs’ average wage, and (3) the state income tax that would be paid on this average wage. Generally, the rebate equals 25% of the state income tax that would be paid on the average wage of the new FTEs. The rebates may be granted over 7 successive years. Businesses must apply with the Department of Economic and Community Development to be accepted into the program.
• Fixed Capital or Machinery and Equipment Credit: Earned for “fixed capital” (generally, not real property) and “machinery and equipment” purchases that are located in Connecticut. The credit is 5% or 10% of the cost of the assets.
• Research Credit: Earned for conducting research activities in the state. The credit ranges from 1% to 20% of eligible research expenses.
• Urban and Industrial Site Reinvestment Credit: Earned for “urban reinvestment projects” in locations that would spur new economic activity and state revenue or “industrial reinvestment projects” with respect to brownfield remediation, that would do likewise. A business can earn a credit of up to 100% for its qualified investment. The tax credit that is earned is allowed over a 10-year period. This credit must be applied for with the Department of Economic and Community Development, who administers the credit.

Beyond tax credits, Connecticut provides numerous sales and use tax exemptions specifically targeted to the manufacturing industry; its localities provide favorable property tax incentives for manufacturers that are located within their borders, and investment in “enterprise zones” designated around the state provide additional incentives for manufacturers.

Additional resources for Connecticut manufacturers

These are just some of the programs and tax incentives offered to Connecticut manufacturers. To learn more about how Connecticut helps its manufacturing industry, you can visit the Office of Manufacturing website Manufacturing and contact CLA.

How we can help

Manufacturing incentive programs and tax credits can help your organization boost revenue and cash flow. CLA’s manufacturing and business incentive consulting teams regularly work with manufacturers to help them evaluate the benefits for which they may be eligible when they make capital investments, hire new employees, or undertake workforce training initiatives. Contact us to get started.