New Hampshire has taken a step forward in its efforts to become a more business-friendly state, by lowering business taxes. On September 16, 2015, New Hampshire’s two-year state budget became law and provides for phased-in business tax cuts. The passage of the budget resulted from a budget compromise reached between legislative leadership and New Hampshire Governor Maggie Hassan. This compromise was reached after months of negotiations that followed Governor Hassan’s June veto of the budget previously passed by the state legislature.

A key piece of the budget law incorporates a measure in the vetoed budget, that provided tax relief for New Hampshire businesses, but with some tweaks. The compromise budget reduces business tax cuts in two steps: a cut in 2016 and a cut in 2018. However, it contains a revenue trigger that requires certain state revenue targets to be met before the second step of the tax cuts can take effect. Below is a summary of the tax cuts.

1) Business Profits Tax

• For tax periods ending on or after December 31, 2016, the Business Profits Tax will drop from 8.5% to 8.2%.
• For tax periods ending on or after December 31, 2018, the Business Profits Tax will drop to 7.9% if certain state revenue targets are met. ¹

2) Business Enterprise Tax

• For tax periods ending on or after December 31, 2016, the Business Enterprise Tax will drop from .75% to .72%.
• For tax periods ending on or after December 31, 2018, the Business Enterprise Tax will drop to .675% if certain state revenue targets are met. ²

¹ If the amount of combined unrestricted general and education trust fund revenue collected for the state biennium ending June 30, 2017 is less than $4,640,000,000, the Business Profits Tax will remain at 8.2%.

² If the amount of combined unrestricted general and education trust fund revenue collected for the state biennium ending June 30, 2017 is less than $4,640,000,000, the Business Enterprise Tax will remain at .72%.