The Connecticut Neighborhood Assistance Act Tax Credit Program

February 25, 2019
News and Insights , SALT

What is the Connecticut Neighborhood Assistance Act

The Connecticut Neighborhood Assistance Act (NAA) Tax Credit Program allows for the funding of municipal and tax-exempt organizations by providing a corporation business tax credit for businesses who make contributions.  By making donations to qualifying organizations in Connecticut, the business can receive their donation back, dollar for dollar and businesses are able to claim their donation as a Federal and State Charitable Contribution Deduction, which will end up yielding the donor about 7% savings on the transaction.

In addition, PM Business Advisors is sweetening the pot some more. By donating to select charities you are eligible for another 10% rebate, totaling 17% net benefit to a business entity on top of the goodwill.

In order to be a part of this credit, Business Entities must submit a request to donate in the form of Form NAA-02 between September 15 and October 1, 2019. A business that has been approved to donate may decide to not donate the full amount they have been approved for, which is perfectly acceptable.

Limitations on the Connecticut Neighborhood Assistance Act

  • Each business entity is limited to receiving $150,000 in tax credit annually.
  • A non-profit organization is limited to receiving $150,000 in contributions in the aggregate.
  • The minimum contribution on which credit can be granted is $250.
  • The program has a five million dollar cap, which, if exceeded, results in proration of approved donations.

Example of the Connecticut Neighborhood Assistance Act At Work

To wrap this all up we can look at this hypothetical. Business Entity Company XYZ submits their application on time and is approved to donate $150,000 within the program. Company XYZ decides to donate $100,000. Company XYZ would receive the original $100,000 back as Connecticut State Tax Credit, $7,000 back from the Charitable Contribution Deduction (approximately 7%).  In addition, Company XYZ will also receive another $10,000 back by partnering with one of PMBA’s Organizations. So when all is said and done Company XYZ would receive $117,000 back for their donation of $100,000.

Participating Charities

For a list of Charities that participated in 2018 please click here.