The H.B. 7287 and H.B. 7166 establish the 2026-2027 state budget and expand the tax credits for digital media and film infrastructure.

Connecticut Governor Ned Lamont (D) signed H.B. 7287 and H.B. 7166, which set the 2026-2027 state budget and expanded tax credits for digital media and film infrastructure.

H.B. 7287 

The budget outlines several key changes, such as:

  • extending the 10% corporation tax surcharge for taxpayers with gross income of USD 100 million or part of a combined group filing unitary tax returns. The surcharge now applies to income years starting before 1 January 2028 (previously 2026), effectively raising the corporation tax rate from 7.5% to 8.25%.
  • An extra USD 213 million in corporate taxes over two years from new income reporting rules and establishes an extension of a corporate tax surcharge until 2028, adding USD 128 million over two years.
  • The limitation of the USD 250 Business Entity Tax and a new tax credit for craft breweries have been introduced.
  • The state’s earned income tax credit (EITC) has been raised to 40% of the federal credit.

H.B. 7166 

This bill updates the state’s tax credit programs for film, digital media production, and film infrastructure. The key changes include:

  • Exempting production companies creating interactive websites from certain eligibility rules and mandating qualifying production companies to apply for a film and digital media production credit voucher within 90 days of completing an independent review of their production costs.
  • Clarifying that the administrative fee charged by the Department of Economic and Community Development (DECD) for analysing tax credit applications is non-refundable.
  • Allowing the DECD to adopt regulations for managing the film tax credit programs, rather than mandating it as before.

Other provisions

The bill exempts eligible production companies that create “interactive websites” from state qualification requirements if their annual production costs exceed USD 500,000 and focus on interactive games, applications, or multimedia content for internet distribution. Additionally, limited liability companies with over 3,000 Connecticut employees engaged in manufacturing that specialise in mechatronics, alignment and sensor technology, and optical fabrication can now qualify for R&D tax credits, which were previously limited to corporations.

H.B. 7166 and the state’s fiscal year 2026 took effect on 1 July 2025.