Hartford Business Journal

HARTFORDBUSINESS.COM | JANUARY 12, 2026 37 INDUSTRY OUTLOOK | HE ALTH CARE "In 2026, workforce capacity and talent pipelines will be key factors shaping how effectively Connecticut meets growing patient needs," Kramer said. Health systems across Connecticut, he said, are struggling to recruit and retain nurses, techni- cians, physicians, behavioral health providers and support staff. "These shortages drive up labor costs, increase dependence on temporary staffing and contribute to burnout among existing team members," Kramer said. To address the challenge, Flaks said the state must make sustained investments in workforce develop- ment, including expanding clinical education capacity, strengthening incentives for providers to practice in rural areas, and better aligning career pathways with real-world demand. He added that closer partner- ships with colleges are essential to building the state's future health- care workforce, with hospitals and medical centers serving as hands-on clinical training sites through formal agreements. He noted that HHC is already part- nering with ReadyCT, a nonprofit affil- iate of the Connecticut Business & Industry Association that promotes career-focused learning for public school students, and has opened a simulation laboratory at Windham Hospital for Eastern Connecticut State University nursing students. At the policy level, the state has also moved to broaden access to nurses. In December, Connecticut joined the Nurse Licensure Compact, which allows registered nurses and licensed practical nurses to practice across 43 participating states and territories using a single multistate license. Lamont said the compact will help ease staffing shortages by allowing qualified nurses from other states to practice in Connecticut more easily. Bioscience and technology Even with all those challenges, industry leaders say advances in technology and bioscience are reshaping how care is delivered and developed in Connecticut. Flaks said artificial intelligence is emerging as a powerful tool for improving care delivery, effi- ciency and affordability when deployed responsibly. Hartford HealthCare has expanded its use of artificial intelligence through its Center for AI Innovation in Healthcare, including partner- ships with technology companies to provide 24/7 virtual primary care services and to support clinicians with AI-assisted medical imaging and decision-making tools. Artificial intelligence is also being used by bioscience compa- nies in the state to develop life-changing therapies. Jodie Gillon, president & CEO of BioCT, the state's life sciences support organiza- tion, says policies can help promote those efforts. "We have to ensure Connecticut remains a competi- tive state for talent and companies to come, stay and grow here," she said. State leaders moved in that direc- tion in 2025 by increasing the R&D tax credit for bioscience companies from 65% to 90%. Gillon said 2025 marked a mile- stone year for the state's life sciences sector, pointing to Johnson & John- son's roughly $3 billion acquisition of New Haven-based Halda Thera- peutics, which is developing novel cancer therapies. "Never in the history of pharma- ceutical development has such a major deal been completed while a startup is so early in" development, she said. EXPERT'S CORNER Federal, state laws expand R&D tax benefits for CT businesses in 2026 By William Claffey and James Goldkamp T wo major pieces of legislation that were passed in 2025 — one federal and one state — will positively impact Connecticut businesses that engage in research and development in 2026. The One Big Beautiful Bill Act and Connecticut's biennial state budget, both passed the same week last summer, include significant expan- sions of R&D benefits. Domestic incentive On the national level, the ability to expense domestic R&D costs imme- diately and not amortize them will be a big money saver. Companies will be able to essen- tially catch up on costs they've had to capitalize in recent years and deduct domestic R&D costs for tax years beginning after Dec. 31, 2024. Foreign R&D costs still have to be capitalized and expensed over a 15-year period, which was done specifically to encourage domestic investment. The Big Beautiful Bill allows businesses that amortized domestic R&D costs in tax years 2022 through 2024 to elect either a full deduction of their remaining, unamortized R&D expenses in 2025 or to spread the deduction evenly over 2025 and 2026. Qualified small businesses — generally those with less than $31 million in average annual gross receipts from 2022 through 2024 — are given two options under the law. They may either amend their 2022-24 tax returns to fully deduct domestic R&D costs for those years, or deduct remaining unamortized domestic R&D expenses from 2022 and 2023 while immediately expensing domestic R&D costs incurred in 2024. Make it here Connecticut's expansion of the R&D tax credit significantly affects both established and emerging biotech- nology companies in the state. The change is rela- tively straightforward. For qualified biotech- nology companies eligible to exchange R&D tax credits because of current-year losses, the exchange rate will increase from 65% to 90% of the credit's value. Companies that do not qualify for the cash exchange may continue to use the credits to offset Connecticut corporation business taxes. This is especially key for emerging companies that don't have revenue, profits or income and are surviving from fundraising round to fundraising round. This tax credit reimburses cash flow to offset some of the expenses that companies are investing in R&D in Connecticut, thereby extending their runway. Connecticut offers two types of research and development tax credits: an incremental credit of 20% and a non-incremental credit, generally equal to 6% of qualifying spending. For example, if a business spent $50,000 on qualifying R&D in one year and $150,000 the next, the $100,000 increase would generate a $20,000 incremental credit, while the total spending would also produce a $3,000 non-incremental credit. Under state law, only 33% of the non-incremental credit may be exchanged for cash. Based on that structure, a qualified biotechnology company eligible for the cash refund could exchange $21,000 in R&D tax credits for a direct cash payment of $18,900. Direct cost identification and proper documentation are critical to accurately claiming and defending an R&D tax credit. William Claffey and James Gold- kamp are members of the state and local tax practice at accounting and advisory firm Fiondella, Milone & LaSaracina LLP (FML CPAs) with offices in Glastonbury, Stamford, New Haven, Avon and Enfield. William Claffey James Goldkamp Jodie Gillon STATES WITH THE HIGHEST AVERAGE MONTHLY HEALTH INSURANCE COSTS RANK STATE 2026 2025 PERCENT CHANGE 1 VERMONT $1,224 $1,157 6% 2 WYOMING $1,119 $895 25% 3 WEST VIRGINIA $1,093 $955 14% 4 NEW YORK $1,090 $1,038 5% 5 ALASKA $1,037 $1,088 -5% 6 NEBRASKA $960 $743 29% 7 ILLINOIS $888 $684 30% 8 CONNECTICUT $859 $708 21% 9 FLORIDA $859 $647 33% 10 LOUISIANA $827 $654 26% Source: Kiplinger/ValuePenguin

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