Governor Ned Lamont announced on Monday that his budget proposal will raise the research and development (R&D) tax credit to 90%. He made the announcement at BioCT’s 2025 Legislative Breakfast in New Haven, which Alexion Pharmaceuticals hosted.
About 200 bioscience executives and state officials attended the event. Lamont said the current R&D tax credit, capped at 65%, was not competitive with neighboring states. “In terms of the R&D tax credit, we’ve worked to be competitive.
So our budget proposal takes that R&D tax credit up to 90%. It makes us much more competitive,” he stated. The governor’s proposal would allow qualifying businesses to choose between a broadly available non-incremental R&D credit or an incremental credit.
Corporations can use these credits to reduce up to 65% of their corporate business tax liability. Dan O’Keefe, Commissioner of the Department of Economic Community Development, said the proposed tax credit change was prompted by feedback from last year’s BioCT legislative breakfast.
Lamont’s R&D tax credit proposal
“There was a question from the audience who asked, ‘why haven’t we done that?'” O’Keefe said. My background is in tech investing. I had no idea we weren’t competitive with Massachusetts.”
State legislators, including Sen.
Christine Cohen (D-Guilford) supports the governor’s proposal. Although the proposal has not been finalized, the bioscience caucus will advocate for it during the legislative session. Lamont also addressed the issue of healthcare costs, including pharmaceutical expenses, which have increased significantly.
He called on the executives to help manage these costs, noting that pharmaceutical costs have doubled as a percentage of the state’s healthcare spending over the past five years. “Even without that change, pharmaceutical costs have risen dramatically,” he said. They have gone from about 10% of our healthcare spending to 20% of our healthcare spending, just in the last five years.
In a panel discussion following Lamont’s address, Robert Popovian, a senior health policy fellow with the Progressive Policy Institute, said pharmacy benefit managers (PBMs) significantly increase prescription drug costs.
He noted that a significant portion of drug prices goes to these intermediaries, which adds little value to the healthcare system. Popovian called for more transparency from pharmaceutical companies regarding pricing. Governor Lamont concluded his remarks by reiterating the value of the bioscience industry to Connecticut’s future and expressing his commitment to being a supportive partner.
