Connecticut Governor Ned Lamont introduces a plan to reduce taxes for businesses.
Small Business Owners to Expect Lower Taxes
A proposal was introduced to restore Connecticut’s pass-through entity tax credit to its original level. This would enable small business owners to save money by claiming a larger credit on their returns. Lamont expressed that these changes will help small business owners save money that they can use to reinvest in their establishments. This can support continued growth and the creation of new jobs.
This pass-through entity tax credit allows business owners to avoid the state tax deduction limitation. Business taxes are deductible for federal tax purposes. In relation, personal income taxes are limited to $10,000. It is directly imposed on the business rather than the owner to avoid the limitation. The business owner can fully deduct it without limitation, on their federal income tax return said NewsTimes.
120,000 Connecticut Businesses will Benefit from The Proposal
The proposal will directly benefit more than 120,000 companies in Connecticut according to Alexandra Daum, the designated commissioner of the state’s Department of Economic and Community Development. The state was the first in the nation to implement a pass-through entity tax credit.
This proposal will return the tax credit to its original level of 93.01 percent. It would also pave a way for Lamont’s proposal on the reduction in the state’s income tax rate. These proposals are the main focus of the governor’s biennial budget proposal that will be presented to the legislature next month.