Connecticut
Connecticut companies engage in a
range of R&D-related activities.1
A sampling of recent work includes:
Stanley Black and Decker’s first AI-enabled automatic pill
dispenser
United Technologies’ (now Raytheon Technologies2) work on quantum computing
for the design of aerospace parts that are both stronger and
lighter
Kaman Corp’s lighter, cheaper bearings
Sikorsky’s work toward the first-ever fully autonomous
helicopter
ASML’s computer chip-related activity has generated over
$6 million in CT R&D credits, including optical position
sensors in semiconductor modules
At Stanley Black and Decker, the AI-enabled pill dispenser
provides vocal reminders to those with chronic conditions who
use the device. It also updates medical providers on
progress and facilitates telemedicine.3
At Raytheon, the leader at quantum information research, Zach
Dutton, says “Whether you’re in the intelligence community with
satellites, or the DoD with radars; whether you’re working in
commercial sales, or big-data mining of some kind, everybody is
trying to solve problems and come up with the most efficient way
to deploy their resources.”
Quantum mechanics provides the machine capability to solve these
complex problems using what Dutton calls “the ultimate law of
the universe.”4
Sikorsky plans to test run its autonomous helicopter5 within the year. The
helicopters reduce pilot workload, including complex
landings, and allow two or more aircraft to navigate confined
airspace more easily.6
Closely linked to autonomous vehicle innovation is the electric
vehicle landscape, including electric boats. The R&D
aspects of such vehicles have been documented here
and here.
Transportation and Other Key
Sectors
The Sikorsky project involves Connecticut’s strongest area of
R&D credits since 2006 - transportation equipment
manufacturing. Yet as the graph below shows, that vertical
is far from the only one generating substantial credits.
More R&D Leaders
Electric Boat is a major part of General Dynamics Corporation
with one of its biggest facilities located in Groton, CT.
Electric Boat has been designing and building submarines for the
U.S. Navy for over 100 years. Recently, the company was
awarded a $9.5 billion contract to build two first-in-class
Columbia class submarines.7
These submarines encompass a wide range of new innovative
operational and defense technologies. With a shift in the
supply chain to additive engineering, Electric Boat does not lag
behind, their current plan for the Columbia class submarines
include 3D printed components.8
Pratt & Whitney is a world leader in the design,
manufacture, and service of aircraft engines. The
Hartford-based company, in conjunction with the University of
Connecticut (UConn), recently opened the new Pratt & Whitney
Additive Manufacturing (AM) Innovation Center at UConn.9
Industry and academic leaders are excited about how the new lab
will benefit the local economy. With $4.5 invested,
there are plans to add an additional $3.5 million.
NanoViricides, Inc. in Shelton, CT develops special purpose
nanomaterials for viral therapy.10
Their goal is to attack enveloped virus particles and dismantle
them with innovative drug candidates. Some targeted
viruses include H1N1 swine flu, H5N1 bird flu, seasonal
Influenza, HIV, oral and genital Herpes, viral diseases of the
eye including EKC and herpes keratitis, Hepatitis C, Rabies,
Dengue fever, and Ebola virus, among others.
Public R&D
Aside from industry, another avenue of Connecticut innovation
has been publicly funded research from world-class research
universities in the state. Yale, Wesleyan, and the
University of Connecticut are just a few. Meanwhile,
state leaders encourage innovation and collaboration between
these universities and the industry. The venture
capital fund, Connecticut Innovations, is the leading source of
finance and support for Connecticut’s innovative
companies. The organization links researchers in
university labs with industrial managers in order to bring the
lab efforts to market.
The University of Connecticut in particular plays a key role as
a resource for Connecticut industries and as a partner to
support economic development. They have several research
centers and more than 85 academic centers which offer expertise,
research, employees, and other types of assistance to local
businesses.
Connecticut has also begun implementing an initiative known as
Bioscience Connecticut, a forward-thinking plan to reinvent the
state’s economy through innovation. This particular
initiative draws upon research resources from UConn, the UConn
Health Center, Yale University, and other nearby research
institutions.
Federal and state R&D tax credit opportunities are available
to support companies engaged in innovation efforts throughout
the state of Connecticut.
The Research & Development
Tax Credit
Enacted in 1981, the now permanent Federal Research and
Development (R&D) Tax Credit allows a credit that typically
ranges from 4%-7% of eligible spending for new and improved
products and processes. Qualified research must meet the
following four criteria:
Must be technological in nature
Must be a component of the taxpayers business
Must represent R&D in the experimental sense and
generally includes all such costs related to the development
or improvement of a product or process
Must eliminate uncertainty through a process of
experimentation that considers one or more alternatives
Eligible costs include U.S. employee wages, cost of supplies
consumed in the R&D process, cost of pre-production testing,
U.S. contract research expenses, and certain costs associated
with developing a patent.
On December 18, 2015, President Obama signed the PATH Act,
making the R&D Tax Credit permanent. Beginning in
2016, the R&D credit can be used to offset Alternative
Minimum tax for companies with revenue below $50MM and for the
first time, pre-profitable and pre-revenue startup businesses
can obtain up to $250,000 per year in payroll taxes and cash
rebates.
The Connecticut R&D Tax
Credit
Connecticut offers a tax credit equal to 20% of R&D
expenditures that exceed similar expenditures from the prior
year. The credit can be used to offset income from any
source. If the company has no income, R&D credits can
be carried forward fifteen years.11
For companies with gross income of $70 million or less, credits
can actually be sold to the state for 65% of their value.
Conclusion
Innovation within Connecticut encompasses a number of industries
and firms, many of which work in conjunction with aggressive
public initiatives. Researchers in the state come from
sectors including transportation and medical among many
others. Federal and state R&D tax credits are
available to support companies and shoulder the costs of
innovative activity.
