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Connecticut: Summary of New Law Extending NOL Carryforward Period and Modifying Net Deferred Tax Liability Deduction

2024 Connecticut State Tax Developments, Conn. Dept. of Rev. Serv. (7/24). The Connecticut Department of Revenue Services (Department) posted a summary of tax legislation enacted in 2024, including legislation that:

1. Extends the state corporation business tax net operating loss (NOL) carryforward period from 20 to 30 income years for NOLs incurred in income years starting on or after January 1, 2025; and
2. Modifies Connecticut’s net deferred tax liability deduction that was enacted as part of the State’s shift from separate entity filing to mandatory combined unitary reporting for purposes of the state corporation business tax [see H.B. 5524, signed by gov. 6/6/24, and State Tax Matters, Issue 2024-24, for more details on this legislation].

Regarding the later provision, the summary explains that certain eligible corporations are “essentially allowed a second opportunity to determine the amount of the net deferred tax liability deduction allowed pursuant to Conn. Gen. Stat. § 12-218g.” To do so, the Department explains that such corporations must file a statement on or before July 1, 2025, specifying the total amount of this deduction, and the allowable deduction may be claimed over a 30-year period starting with the “first income year that begins in 2026.” Please contact us with any questions.