AN ACT ESTABLISHING A TAX CREDIT FOR THE CONSTRUCTION OF RESIDENTIAL UNITS ABOVE RETAIL PROPERTY.

HB 7114 creates a 10% state tax credit for construction costs when developers build residential units above existing retail properties. It applies to both for-profit owners and nonprofit housing organizations that construct residential units on at least one additional floor above retail space, with a maximum credit for three floors. To qualify, projects must exceed $15,000 in construction costs, require pre-approval from the Housing Commissioner for construction plans, and undergo post-completion verification of actual costs. The credit can be applied against Connecticut’s income tax (Chapter 208) and carried forward if unused in the initial tax year. The program becomes effective January 1, 2026, for taxable years beginning after December 31, 2025.