Connecticut Commercial Real Estate Tax Incentives: What You Need to Know in 2025

Updated June 18, 2025

Connecticut offers a wide range of commercial real estate tax incentives aimed at promoting investment, development, and business growth throughout the state. These programs are designed to revitalize communities, support job creation, and help businesses reduce their tax burden while expanding their footprint in Connecticut.

This guide outlines the most current and impactful tax incentives available to developers, investors, and property owners as of mid-2025.

Enterprise Zone Benefits

Connecticut designates specific distressed urban areas as Enterprise Zones to stimulate economic revitalization.

Key benefits include:

• A five-year, 80% property tax abatement on eligible real and personal property improvements

• A ten-year, 25% credit on corporate business taxes generated from operations within the zone

Urban and Industrial Site Reinvestment Tax Credit

This program supports large-scale investment in designated urban and industrial areas.

Eligibility and benefits:

• Investments of $5 million or more in distressed communities, or $50 million elsewhere in the state

• Tax credits covering up to 100% of the approved investment, distributed over a ten-year period

Manufacturing Assistance Act (MAA)

The MAA offers direct support to businesses in manufacturing, distribution, and logistics.

Incentives include:

• Grants and low-interest loans for facility improvements and job creation

• A five-year, 100% exemption on personal property tax for eligible machinery and equipment used in manufacturing or biotechnology

Historic Preservation Tax Credits

Businesses that rehabilitate certified historic commercial or mixed-use properties can receive both state and federal tax incentives.

Available credits:

• A 25% state tax credit on qualified rehabilitation costs

• A 30% state credit if the project includes at least 20% affordable rental housing or 10% affordable for-sale units

• A 20% federal tax credit for additional rehabilitation expenditures

Brownfield Remediation Incentives

To encourage redevelopment of contaminated or abandoned sites, Connecticut provides several incentives to offset cleanup costs.

These include:

• Grants covering up to 50% of eligible environmental remediation expenses

• Property tax abatements and income tax credits related to remediation

• Sales and use tax exemptions on remediation-related equipment and services

Federal Opportunity Zones

Investors who reinvest capital gains into Qualified Opportunity Funds targeting designated Connecticut Opportunity Zones can benefit from significant tax advantages.

Key features:

• Deferral of capital gains taxes until the earlier of sale or December 31, 2026

• A potential basis step-up (10% after 5 years, 5% after 7 years)

• Exclusion of capital gains on new investments held for at least 10 years

New and Emerging Legislation: SB 778

Commercial-to-Residential Conversion Tax Credit (Effective October 1, 2025)

This new legislation, passed in early 2025 and pending final signature, incentivizes the conversion of commercial or industrial buildings into residential or mixed-use spaces.

Provisions include:

• A 10% tax credit on eligible conversion costs exceeding $15,000 per unit

• A per-unit cap of $30,000 to $50,000 depending on ownership structure

• A requirement that at least 10% of the units be designated affordable housing

• Bonus “housing unit-equivalent” points awarded to municipalities for participation

Final Considerations

Ready to Explore the Benefits?

Connecticut’s commercial real estate tax incentives provide strategic opportunities for businesses and investors seeking to grow, revitalize properties, or reduce their tax burden. Whether you’re focused on redevelopment, manufacturing, or historic preservation, these programs can make a measurable impact on your bottom line.

Have questions about how these incentives apply to your project?
Contact our Real Estate Tax team to explore how we can help you navigate the options and maximize your returns.