New Hampshire offers a high quality of life, marked by scenic landscapes, low crime, and a favorable tax environment for workers. Despite these strengths, the state ranks poorly in business tax competitiveness. According to the Tax Foundation, a nonpartisan research organization, New Hampshire placed 37th nationally in October — trailing neighboring states such as New York, Connecticut, Rhode Island, and Massachusetts.\n\nThe state depends heavily on revenue from business taxes, primarily the Business Profits Tax (BPT) and Business Enterprise Tax (BET), which together generate over three times more income than the next largest tax source. Data shows that business tax contributions to the General and Education Fund rose from 25 percent in 2015 to 39 percent in 2023, even as tax rates were reduced to improve economic appeal.\n\nThis figure does not account for additional business contributions through the Statewide Education Property Tax, insurance levies, and indirect payments. With economic uncertainty and declining tax receipts, implementing growth-oriented tax reforms could stimulate investment and enhance competitiveness.\n\nEncouraging private-sector expansion alongside responsible fiscal management would benefit the entire state. Four targeted policy adjustments could empower small enterprises — the foundation of New Hampshire’s economy — to expand operations, hire more staff, and invest in equipment and communities.\n\nFirst, reducing the BET rate from 0.55 percent to 0.50 percent would continue a decade-long bipartisan effort to improve the business climate. Since the BET is effectively a tax on payroll, lowering it would incentivize hiring, addressing a persistent challenge for small employers struggling to find qualified workers.\n\nSecond, increasing the state’s Section 179 deduction limit would align it with federal changes. While the federal cap rose to $2.5 million, New Hampshire’s remains at $500,000. Raising this threshold would help small businesses offset inflationary pressures, recognize full asset value upfront, and free capital for further growth.\n\nThird, extending the net operating loss (NOL) carryforward beyond the current 10-year limit would provide greater financial flexibility. Unlike the federal policy allowing indefinite carryforwards, New Hampshire’s restriction disadvantages startups and firms navigating cyclical downturns, hindering recovery during early or volatile profit phases.\n\nFourth, adopting 100 percent bonus depreciation — now permanent at the federal level — would allow businesses to deduct full costs of qualifying investments immediately. Currently unavailable in the state, this tool would amplify the impact of capital spending, benefiting both direct investors and surrounding economic actors.\n\nWhether enacted collectively or gradually, these reforms would bolster the state’s economic resilience, improve its standing in business tax rankings, and support entrepreneurial risk-taking. The goal is to maintain New Hampshire’s role as a regional economic leader and a national model for innovation and enterprise.\n\n— news from NH Journal\n\n— News Original —\nGrowth Reform Can Secure New Hampshire’s Economic Future\nNew Hampshire is a great place to live, work, and raise a family. Incredible natural beauty, low crime rates, and worker-friendly tax policies create a climate of opportunity. \n\nUnfortunately, we continue to lag in business tax competitiveness. In October, the Tax Foundation, a well-respected nonpartisan group dedicated to sound tax policy, ranked New Hampshire’s business tax system 37th in the country — behind New York, Connecticut, Rhode Island, and Massachusetts. \n\nOur state relies heavily on businesses, small and large, to fund government operations and services. Together, the Business Profits Tax (BPT) and Business Enterprise Tax (BET) are the largest revenue sources for the state, bringing in more than three times as much money as the next-largest tax. \n\nAccording to state data, the share of General and Education Fund revenue from business taxes grew from 25 percent in 2015 to 39 percent in 2023, even as the state reduced business tax rates to improve competitiveness. \n\nAnd this does not include direct and indirect business payments toward the Statewide Education Property Tax, insurance taxes, and more. \n\nAs New Hampshire works its way through a period of economic uncertainty with diminished tax revenues, it should adopt pro-growth tax reform to drive greater investment and improve the state’s competitiveness. \n\nBoosting private-sector growth and exercising fiscal restraint will benefit the entire state. \n\nFour key tax changes would allow small businesses — the blocks of granite on which New Hampshire’s economy is built — to invest more in their workers, facilities, equipment, and communities. \n\nEmployment Tax Relief. Already on the table is a proposal to lower the BET rate from 0.55 percent to 0.50 percent. This continues a decade of bipartisan reform aimed at improving business tax competitiveness. \n\nIn a nutshell, the BET is a tax on employment. A simple and true maxim in public policy is that if you want less of something, tax it. \n\nFinding qualified workers has been and will continue to be a major challenge for small employers. Reducing taxes on employment will help them hire and grow their workforce. \n\nSection 179 Expensing. The nonpartisan Tax Foundation cites New Hampshire’s relatively low limits on capital investment deductions for small businesses as a drag on the state’s business tax competitiveness. \n\nNamed for its place in federal law, Section 179 allows businesses to deduct the cost of investment in certain buildings, vehicles, and equipment in the first year of purchase. This year’s federal tax bill permanently doubled the annual deduction from $1.25 million to $2.5 million. New Hampshire’s deduction has been stuck at $500,000 for years. \n\nInflation remains one of the top small-business problems, behind only taxes and workforce challenges in small-business surveys. In addition to boosting investment, increasing the state’s Section 179 deduction would help offset inflation by recognizing the full value of an investment in present dollars and freeing up additional funds to continue growing. \n\nNet Operating Loss (NOL) Carryforward. The state’s limit on NOL carryforward is another mark against our competitiveness. It takes years for most businesses to become reliably profitable, and annual revenue often varies even for established firms. \n\nThe 2017 federal tax bill allowed businesses to carry NOL to any future year. New Hampshire limits the carryforward to a period of 10 years. \n\nAllowing businesses to carry forward net losses establishes a more accurate financial picture and basis for taxes owed. This restriction is particularly detrimental to small businesses that lose money in their nascent years or experience a large loss as part of a cyclical downturn, followed by modest profits as the business gains its footing. \n\n100 Percent Bonus Depreciation. Bonus depreciation allows businesses to deduct a larger amount of certain capital expenses up front, rather than having to spread the deduction over decades. It can be utilized on top of Section 179 or on its own. Local small businesses see both direct benefit and downstream impact from others’ investments. \n\nFederal lawmakers made 100 percent bonus depreciation permanent earlier this year. New Hampshire does not allow bonus depreciation. \n\nWhether adopted all at once or phased in over time, these four reforms will help secure our state’s economic future, improve our business tax competitiveness, and make it easier for more small businesses to take the risks necessary to flourish and thrive. \n\nWe want New Hampshire to remain the economic engine of New England and a national leader in entrepreneurship. Pro-growth tax reform will help us lead the way.
