HB 5409 — AN ACT CONCERNING TROOPS-TO-TRADES INITIATIVES.

5409Sec. Commissioner of Economic Development may examine the efficacy of various incentives, including, but not limited to, tax credits, wage subsidies and reimbursements for training.

(b)6. Not later than January 15, 2027, the Commissioner of Economic and Community Development shall submit a report containing the legislative recommendations developed pursuant to subsection (a) of this section to the joint standing committees of the General Assembly having cognizance of matters relating to labor, veterans and military affairs and economic development, in accordance with the provisions of section 11-4a of the general statutes.

(NEW) (Effective January 1, 2027, and applicable to income years commencing on or after January 1, 2027) (a) As used in this section:

(1) "Armed forces" has the same meaning as provided in section 27- 103 of the general statutes;

(2) "Commissioner" means the Commissioner of Economic and Community Development;

(3) "Control", with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote.

"Control", with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the sHB5409 / File No.

149 5 sHB5409 File No.

149 beneficial interest in the principal or income of such trust.

The ownership of stock in a corporation, of a capital or profits interest in a partnership, limited liability company or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, other than paragraph (3) of said Section 267(c);

(4) "Full-time job" means a job in which an employee is required to work at least thirty-five hours per week for not less than forty-eight weeks in a calendar year.

"Full-time job" does not include a temporary or seasonal job;

(5) "Income year" means, with respect to entities subject to the insurance premiums tax under chapter 207 of the general statutes, the corporation business tax under chapter 208 of the general statutes, the utility companies tax under chapter 212 of the general statutes or the income tax under chapter 229 of the general statutes, the income year as determined under each of said chapters, as the case may be;

(6) "New employee" means a person who resides in the state and is hired by a taxpayer on or after January 1, 2027, to fill a new job.

"New employee" does not include a person who was employed in the state by a related person with respect to a taxpayer during the prior twelve months;

(7) "New job" means a job that did not exist in the state prior to a taxpayer's application to the commissioner for certification under this section for a job expansion tax credit, is filled by aveteran employee and is a full-time job;

(8) "Related person" means (A) a corporation, limited liability company, partnership, association or trust controlled by the taxpayer, (B) an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, (C) a corporation, limited liability company, partnership, association or trust controlled by sHB5409 / File No.

149 6 sHB5409 File No.

149 an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer, or (D) a member of the same controlled group as the taxpayer;

(9) "Taxpayer" means a person that (A) has been in business for at least twelve consecutive months prior to the date of the taxpayer's application to the commissioner for certification under this section for a job expansion tax credit, and (B) is subject to tax under chapter 207, 208, 212 or 229 of the general statutes;

(10) "Veteran" has the same meaning as provided in section 27-103 of the general statutes;

and (11) "Veteran employee" means a new employee who, at the time of hiring by the taxpayer, is (A) a current or former member of the armed forces, or (B) a veteran.

(b) (1) There is established a job expansion tax credit program whereby a taxpayer may be allowed a credit against the tax imposed under chapter 207, 208, 212 or 229 of the general statutes, other than the liability imposed by section 12-707 of the general statutes, for each veteran employee hired on or after January 1, 2027.

For taxpayers that employ not more than fifty employees in full-time jobs in the state on the date of application to the commissioner for certification under this section, the creation of at least one new job in the state shall be required for such tax credit.

For taxpayers that employ more than fifty, but not more than one hundred employees in full-time jobs in the state on the date of application to the commissioner for certification under this section, the creationofat least five new jobs in the state shall be required for such tax credit.

For taxpayers that employ more than one hundred employees in full-time jobs in the state on the date of application to the commissioner for certification under this section, the creation of at least ten new jobs in the state shall be required for such tax credit.

(2) For the purposes of determining the number of new jobs a taxpayer is required to create in order to claim a credit under this section, the number of employees working in full-time jobs the taxpayer sHB5409 / File No.

149 7 sHB5409 File No.

149 employs in the state on the date of its application to the commissioner for certification under this section shall apply to such taxpayer for the duration of such certification.

(c) The credit shall be in a one-time amount of two thousand five hundred dollars for each veteran employee hired on or after January 1, 2027.

(d) (1) The taxpayer shall claim the credit in the income year in which it is earned and, if eligible, in the two immediately succeeding income years.

Any credit not claimed by the taxpayer in an income year shall expire and shall not be refundable.

(2) If the taxpayer is an S corporation or an entity treated as a partnership for federal income tax purposes, the shareholders or partners of such taxpayer may claim the credit.

If thetaxpayer is a single member limited liability company that is disregarded as an entity separate from its owner, the limited liability company's owner may claim the credit.

(3) No taxpayer shall claim a credit for any veteran employee who is an owner, member or partner in the business or who is not employed by the taxpayer at the close of the taxpayer's income year.

(4) No taxpayer claiming the credit under this section with respect to a veteran employee shall claim any credit against any tax under any other provision of the general statutes with respect to the same veteran employee.

(e) (1) To be eligible to claim the credit, a taxpayer shall apply to the commissioner in accordance with the provisions of this section.

The application shall be on a form provided by the commissioner and shall contain sufficient information as required by the commissioner, including, but not limited to, the activities that the taxpayer primarily engages in, the North American Industrial Classification System code of the taxpayer, the current number of employees employed by the taxpayer as of the application date, and, if applicable, the name and sHB5409 / File No.

149 8 sHB5409 File No.

149 position or job title of the veteran employee.

The commissioner shall consult with the Commissioner of Veterans Affairs for any verification the commissioner deems necessary of service in the armed forces of the United States by a veteran employee.

The commissioner may impose a fee for such application as the commissioner deems appropriate.

(2) (A) Upon receipt of an application, the commissioner shall render a decision, in writing, on each completed application not later than thirty days after the date of its receipt by the commissioner.

If the commissioner approves such application, the commissioner shall issue a certification letter to the taxpayer indicating that the credit will be available to be claimed by the taxpayer if the taxpayer and the veteran employee otherwise meet the requirements of this section.

(B) On and after January 1, 2027, the commissioner shall render a decision upon such completed applications and, if approved, issue such certificationletters, asprovidedinsubparagraph(A)ofthissubdivision, that pertain to veteran employees who meet the requirements of this section, and with respect to whom credits pursuant to this section have previously been granted.

(f) The total amount of credits granted under this section shall not exceed one million dollars in any one fiscal year.

(g) No credit allowed under this section shall exceed the amount of tax imposed on a taxpayer under chapter 207, 208, 212 or 229 of the general statutes.

The commissioner shall annually provide to the Commissioner of Revenue Services a list detailing all credits that have been approved and all taxpayers that have been issued a certification letter under this section.

4 fromOctober passage1, New2026 section14-11k StatementsHB5409 of/ Purpose:File No.

To149 support9 veteranssHB5409 andFile membersNo. of the armed forces in the transition from military life to the civilian workforce through information sharing of available resources relating to educational and employment opportunities.

[Proposed149 deletionsSec. are enclosed in brackets.

Proposed5 additionsfrom arepassage indicatedNew by underline, except that when the entire text of a bill or resolution or a section ofSec. a bill or resolution is new, it is not underlined.] LCO No.

23026 5January 1, 2027, and New section applicable to income years commencing on or after January 1, 2027 Statement of 5Legislative Commissioners:

In Section 1(a)(1)(A), "conspicuously post" was changed to "post in a conspicuous location", for clarity, and "section 3 of this act" and "section of this act" were changed to "subsection (a) of section 2 of this act" and "subsection (b) of section 3 of this act", respectively, for accuracy;

in Section 1(b)(1), "the region" was changed to "the northeastern region of the United States", for accuracy;

in Section 1(c)(2), "conspicuously post" was changed to "post in a conspicuous location", for clarity;

in Section 3(b), "subsection (a) of this act" was changed to "subsection (a) of this section", for accuracy;

in Section 5(b), "economic development" was changed to "commerce", for statutory consistency;

and in Section 6(e)(1), ", of any such veteran employee's disability rating or any such veteran employee's status as to discharge or release, as applicable, from the armed forces" was deleted, for consistency with other provisions of the section.

VA Joint Favorable Subst.

sHB5409 / File No.

149 10 sHB5409 File No.

149 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 27 $ FY 28 $ Labor Dept.

GF - Cost None Up to 100,000 Military Dept.

GF - Potential None Up to Cost 224,963 State Comptroller - Fringe GF - Potential None Up to Benefits1 Cost 89,898 Vet.

Affairs, Dept.

GF - Cost 50,000 50,000 Department of Revenue Services GF - Potential None Up to 1 Revenue Loss million Department of Economic & GF - Potential 34,750 69,000 Community Development Cost Note:

GF=General Fund Municipal Impact:

None Explanation The bill places various requirements related to current and former armed forces members on several state agencies and results in the fiscal impacts described below.

Section 1 establishes several requirements for the Department of Labor related to veteran and military member career support, including a study of models from other states in the region that deploy technology to connect such individuals with prospective employers.

This results in a cost of up to $100,000 in FY 28 for the hiring of a consultant to conduct The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller.

The estimated active employee fringe benefit cost associated with most personnel changes is 41.82% of payroll in FY 27.

sHB5409 / File No.

149 11 sHB5409 File No.

149 such study.

Section 2 requires the Military Department to increase promotion of and periodically improve its employment assistance program, resulting in a potential cost to the Military Department of up to $224,963 and a potential cost to the State Comptroller of up to $89,898 beginning in FY 28.

Depending on the extent to which the department improves and promotes the program and how many transitioning servicemembers participate, the department may need to hire one Program Manager and one Executive Assistant II.

Costs of equipment and supplies for these positions are not expected to exceed $10,000 annually.

Section 3 requires the Department of Veterans Affairs (DVA) to hold an annual “Stand Down” event at multiple locations around the state, which must include a job fair to promote the hiring of current and former members of the armed services, reserves, and National Guard.

DVA currently holds six such annual events around the state that include employers and workforce development providers.

These events are currently funded through the agency’s Institutional General Welfare Fund.

3 Due to the depletion of this fund, it is estimated that DVA will require $50,000 beginning in FY 27 to continue to sponsor “Stand Down” events.

Section 4 makes a technical change that does not result in a fiscal impact.

Section 5 requires the Department of Economic and Community Development (DECD) to develop legislative recommendations for promoting in-state employment of armed forces members and has no fiscal impact.

It is anticipated that DECD can produce these recommendations within existing resources.

Section 6 establishes a veterans' job tax credit program and results in The starting salaries for these positions are $98,695 and $116,268, respectively.

The total estimated fringe benefits cost for these positions is $89,898.

3This fund is currently supported via fees from residents at the Veterans' Home and private monetary donations made to the state for veterans.

sHB5409 / File No.

149 12 sHB5409 File No.

149 a potential revenue loss of up to $1 million annually as early as FY 28.4 The actual magnitude and timing of the revenue loss depends on the timing and number of qualifying jobs created.

A similar expired tax credit program (the Job Expansion Tax Credit) resulted in credits being claimed for approximately 50 military jobs annually from 2012 through 2014.

The section also results in a potential cost of $34,750 to DECD in FY and $69,500 annually thereafter to administer the Job Expansion Tax Credit program.

It is anticipated that DECD will require one part-time (0.5 FTE) position at an annualized cost of $49,000 in salary and $20,500 in fringes to manage applications and approvals for tax credits under the program which is capped at $1 million per year.

The bill allows DECD to charge an application fee which may partially or fully offset the cost to administer this program.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to the scale of improvement to and promotion of the Military Department's employment assistance program and inflation.

4The total amount of credits is capped at a total of $1 million annually.

Each credit is a one-time amount of $2,500 per qualifying veteran job created.

sHB5409 / File No.

149 13 sHB5409 File No.

149 OLR Bill Analysis sHB 5409 AN ACT CONCERNING TROOPS-TO-TRADES INITIATIVES.

SUMMARY This bill establishes a job expansion tax credit program and various requirements and initiatives to assist current and former armed forces members transition into the civilian workforce.

Under the bill, the program gives a tax credit to businesses that create new jobs for veterans.

It allows employers a $2,500 credit for each veteran hired, with a maximum of $1 million each fiscal year of the program.

Among other things, the bill also requires the:

1.

Department of Labor (DOL) to (a) update its informational webpage with certain relevant information and resources for those transitioning from the military to the civilian workforce and (b) study models from other states that use technology to connect armed forces members with prospective employers;

2.

adjutant general, to (a) increase promotion of, and periodically improve the Military Department’s employment assistance program and (b) post certain signs at weekend trainings;

3.

Department of Veterans Affairs (DVA) commissioner to (a) send a biweekly email with certain job-related information and (b) annuallyhold aone-day“StandDown”event thatoffersservices, supplies, or assistance to any veteran;

and 4.

Department of Economic and Community Development (DECD) commissioner to develop legislative recommendations for promoting in-state employment of armed forces members.

sHB5409 / File No.

149 14 sHB5409 File No.

149 EFFECTIVE DATE:

October 1, 2026, except the legislative recommendation provision is effective upon passage, and the tax credit program is effective January 1, 2027, and applicable to income years commencing on or after that date.

§ 6 — JOB EXPANSION TAX CREDIT The bill establishes a job expansion tax credit program, substantially similar to a program that ended on January 1, 2014, where a business that hires veteran employees on or after January 1, 2027, is allowed to credit against the insurance premium, corporation business, utility company, or personal income tax, but not the withholding tax.

It allows businesses a one-time $2,500 credit for each veteran hired, with a maximum of $1 million each fiscal year for the program.

Businesses claiming a job expansion tax credit for a new hire cannot count the veteran toward other credits the law allows.

For the tax credit , a veteran employee is (1) any current or former member of the armed forces or (2) anyone honorably discharged or released under honorable conditions, or released with an other than honorable (OTH) discharge based ona qualifying condition, fromactive service in the armed forces (the U.S.

Army, Navy, Marine Corps, Coast Guard, Space Force, Air Force, and any of their reserve components, including the Connecticut National Guard when under federal service) (CGS § 27- 103).

Eligible Companies and Jobs Under the bill, a business qualifies for the credit only for new jobs for veteran employees it creates after January 1, 2027.

The business must (1) have been in business for 12 consecutive months prior to its credit application and (2) be subject to any of the taxes to which the credit applies.

In addition, the job to which the credit applies must (1) not have existed in Connecticut before the application and (2) be filled by a veteran employee at full-time, which does not include a temporary or seasonal job.

Businesses with 50 or fewer employees in the state qualify for the sHB5409 / File No.

149 15 sHB5409 File No.

149 credit if they create at least one new job;

those with 51 to 100 employees, if they create at least five;

and those with more than 100 employees, at least 10.

The number of full-time employees the business employs in Connecticut is calculated based on when the business applies for the credit, which applies for the credit certificate’s duration.

The job must require a new employee to work at least 35 hours per week for at least 48 weeks per calendar year.

A business cannot count a veteran employee as new if the employee 1.

owns the business or is a member or partner in it, 2.

no longer works for the business at the end of its income year, or 3.

worked in Connecticut for a related business during the previous months.

An employee worked for a related business if:

1.

the business where the veteran formerly worked controls the business that subsequently hired him, 2.

the business that hired the veteran controls the business where he or she previously worked, 3.

thebusinesswheretheveteranworkedispartofalargerbusiness entity that also controls the business that hired him or her, or 4.

both businesses belong to the same group of controlled businesses.

A company is “controlled” by someone if the person directly or indirectly owns more than 50% of the combined voting power of all classes of its stock.

In the case of a trust, control means owning 50% or more of the beneficial interest of the trust’s principal or income.

Ownership is determined as outlined in federal income tax law.

Application and Approval Procedure sHB5409 / File No.

149 16 sHB5409 File No.

149 To claim the credits, businesses must apply to DECD for a certification letter.

The business must use a DECD form and give DECD enough information to determine its eligibility.

The information must (1) describe the business’ activities;

(2) indicate its North American Industrial Classification System (NAICS) code;

(3) specify the number of people employed as of the application date;

and, if applicable, (4) identify the new hire’s name and job title or classification.

The DECD commissioner, in his discretion, must consult with DVA commissioner to verify a person’s eligibility as a veteran employee.

The DECD commissioner may charge an application fee as he deems appropriate.

Claiming Credits The DECD commissioner must issue a written decision on each completed application within 30 days after receiving it.

If he approves the application, he must issue the certification letter (1) indicating that the business may claim the credit if the business and new employee meets the bill’s requirements and (2) to a business employing veteran employees who met the bill’s requirements for which credits were previously been granted.

The commissioner must annually give the revenue services commissioner a list of the businesses that he approved for credits and that have been issued certification letters.

The business must claim the credit in the income year in which it createdthejobandhiredanewemployeetofillit.

Itmayclaimthecredit for each of thetwo subsequent years if the employee remains employed.

The credit cannot exceed the total tax due.

Unused credits expire and cannot be refunded.

The bill also allows shareholders and partners of S corporations and partnerships to claim the credit.

With respect to single-member limited liability companies (LLCs) that are disregarded as entities separate from their owners, only the company’s owner may claim the credit.

sHB5409 / File No.

149 17 sHB5409 File No.

149 §§ 1 & 2 — DOL INFORMATIONAL WEBPAGE The bill requires the DOL commissioner, by January 1, 2027, to improve and update the veteran employment information DOL provides on the Internet.

First, the bill requires her to update the department’s informational webpage serving as a central repository of information, resources, and materials.

The webpage must include links to external sources on:

1.

job training, 2.

career counseling, 3.

workforce development organizations, 4.

employers who are veteran- and military-friendly or who establish and commit to meeting veteran hiring targets and current and former armed forces members, and 5.

other relevant topics for those transitioning from the military to a professional civilian occupation.

Additionally, she must (1) post in a conspicuous location on the informational webpage details of relevant Military Department employment assistance programming (see § 3) and the DVA job fair (see § 4) and (2) try to optimize the webpage’s visibility in Internet search engine results.

Thebillalso requirestheDOLcommissioner,startingJanuary1,2027, to annually solicit known and reputable providers of information, resources, and materials described above.

She must do this in consultation with the DVA commissioner and adjutant general.

DVA Newsletter and Website The bill requires the DVA commissioner, starting January 1, 2027, to (1) send a biweekly email newsletter with relevant resources and materials included on the DOL informational webpage to interested recipients and (2) post a link to the webpage in a conspicuous location on the DVA’s website.

sHB5409 / File No.

149 18 sHB5409 File No.

149 Under the bill, the DOL commissioner must (1) make the informational page available in a way an interested person can ask to receive the biweekly email newsletter and (2) forward to the DVA commissioner the email addresses of those interested recipients during the preceding month.

Training Site Signage Beginning January 1, 2027, the bill requires the adjutant general to post, in conspicuous locations throughout each inactive duty training weekend site, signage containing a quick response (QR) code that current reserve members or the National Guard can use to access the informational webpage.

§ 1 — DOL STUDY ON TECHNOLOGY USE FOR JOB CONNECTION By January 1, 2028, the bill requires the DOL commissioner to study models from other northeastern region states that use technology, including artificial intelligence, to connect current and former armed forces members with prospective employers based on the members’ military occupational specialties, and educational and professional backgrounds.

The commissioner must use the study’s findings to update the informational webpage.

Under the bill, the commissioner must submit a report on her findings and recommendations to the Veterans’ and Military Affairs Committee by February 1, 2028.

§ 2 — MILITARY DEPARTMENT ASSISTANCE PROGRAM The bill requires the adjutant general, in consultation with the DOL commissioner and within existing resources, to promote and periodically improve the Military Department’s employment assistance program.

The adjutant general and the DOL commissioner must tailor the promotion and improvements to better supplement the federal transition assistance program administered by the U.S.

Department of Defense.

Currently, the program offers advice and information to current and former armed forces members, including any reserve component and sHB5409 / File No.

149 19 sHB5409 File No.

149 the National Guard, who are considering available educational and occupational opportunities.

§§ 3 & 4 — “STAND DOWN” EVENT The bill requires the DVA commissioner to annually hold a one-day “Stand Down” event throughout the state that offers services, supplies, or assistance to any veteran.

(In practice, DVA is already conducting these events.) Beginning January 1, 2028, the commissioner must include, as part of these events, a job fair to promote employment of current and former armed forces members, including reserve and National Guard members.

The DVA commissioner may coordinate with the DOL commissioner to invite representatives of Connecticut employers to attend the fair and present information about prospective employment opportunities.

The DVA commissioner must also publicize the job fair on the department’s website and in the biweekly newsletter required above.

§ 5 — LEGISLATIVE RECOMMENDATIONS By August 1, 2026, the bill requires the DECD commissioner, in consultation with the DOL and DVA commissioners and any other official, organization, or entity, he deems appropriate, to develop legislative recommendations for promoting in-state employment of current and former armed forces members, including reserve and National Guard members.

In developing these recommendations, the DECD commissioner may examine the effectiveness of various incentives, including tax credits, wage subsidies, and training.

The DECD commissioner must report these recommendations to the Commerce, Labor and Public Employees, and Veterans’ and Military Affairs committees by January 15, 2027.

BACKGROUND Related Bill sHB 5003, §§ 45-49, favorably reported by the Labor and Public sHB5409 / File No.

149 20 sHB5409 File No.

149 Employees Committee, has substantially similar provisions related to the DOL informational webpage, study on technology use for job connection, the “stand down” event, and legislative recommendations.

COMMITTEE ACTION Veterans’ and Military Affairs Committee Joint Favorable Substitute Yea 22 Nay 0 (03/10/2026) sHB5409 / File No.

149 21