Bill Text - HB155 (2025)

Reducing the rate of the business enterprise tax.

Revision: Jan. 4, 2025, 10:10 p.m.

HB 155-FN - AS INTRODUCED

 

 

2025 SESSION

25-0504

07/05

 

HOUSE BILL 155-FN

 

AN ACT reducing the rate of the business enterprise tax.

 

SPONSORS: Rep. Sweeney, Rock. 25; Rep. Alexander Jr., Hills. 29; Rep. Berry, Hills. 44; Rep. Osborne, Rock. 2

 

COMMITTEE: Ways and Means

 

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ANALYSIS

 

This bill reduces the rate of the business enterprise tax for tax years ending on or after December 31, 2026.

 

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Explanation: Matter added to current law appears in bold italics.

Matter removed from current law appears [in brackets and struckthrough.]

Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.

25-0504

07/05

 

STATE OF NEW HAMPSHIRE

 

In the Year of Our Lord Two Thousand Twenty Five

 

AN ACT reducing the rate of the business enterprise tax.

 

Be it Enacted by the Senate and House of Representatives in General Court convened:

 

1 New Paragraph; Business Enterprise Tax; Rate Reduced. Amend RSA 77-E:2 by inserting after paragraph II the following new paragraph:

III. For all taxable periods ending on or after December 31, 2026, a tax is imposed at the rate of 0.50 percent upon the taxable enterprise value tax base of every business enterprise.

2 Effective Date. This act shall take effect July 1, 2025.

 

LBA

25-0504

12/11/24

 

HB 155-FN- FISCAL NOTE

AS INTRODUCED

 

AN ACT reducing the rate of the business enterprise tax.

 

FISCAL IMPACT:   This bill does not provide funding, nor does it authorize new positions.

 

 

Estimated State Impact

 

FY 2025

FY 2026

FY 2027

FY 2028

Revenue

$0

Indeterminable Decrease

Indeterminable Decrease

Indeterminable Decrease

Revenue Fund(s)

General Fund and Education Trust Fund

Expenditures*

$0

$0

$0

$0

Funding Source(s)

None

Appropriations*

$0

$0

$0

$0

Funding Source(s)

None

*Expenditure = Cost of bill                *Appropriation = Authorized funding to cover cost of bill

 

METHODOLOGY:

This bill reduces the Business Enterprise Tax (BET) rate from 0.55% to 0.50% for taxable periods ending on or after December 31, 2026.  The Department of Revenue Administration states the fiscal impact is indeterminable as the Department is not able to predict future BET tax revenue.  Based on the following assumptions/information, the Department is able to estimate a possible fiscal impact:

  • reducing the BET rate will also reduce the BET credit available to offset the Business Profits Tax (BPT), increasing BPT revenue. However, the BPT increase will be less than the BET decrease as not all taxpayers have a BPT liability to be offset by the BET credit and not all taxpayer's BET liability exceeds the BPT credit.  In those situations the BET loss in revenue is not offset by an increased BPT liability.
  • the starting point for calculating the fiscal impact on FY 2026 thru FY 2028 revenues is the Tax Year 2022  BET tax base of $42,000,000,000.
  • based on a tax year revenue analysis of prior fiscal years, it was determined fiscal year tax revenue is comprised of 12 percent from the tax year 2 years ago, 69 percent is from the tax year 1 year ago and 19 percent from the current tax year  (See table 1 below)

 

The first table below provides the tax rates and splits.  The second table provides an estimated impact the rate changes will have on revenue.

 

Table 1. Proposed Legislation Rates and Splits

Fiscal Year

Tax Year

% Applicable to Tax Year

BET Rates

Fiscal Year 2026

Tax Year 2024

12%

0.55%

Tax Year 2025

69%

0.55%

Tax Year 2026

19%

0.50%

Fiscal Year 2027

Tax Year 2025

12%

0.55%

Tax Year 2026

69%

0.50%

Tax Year 2027

19%

0.50%

Fiscal Year 2028 and forward

Tax Year 2026

12%

0.50%

Tax Year 2027

69%

0.50%

Tax Year 2028

19%

0.50%

 

 

Table 2. BET Rate Change Fiscal Impact - Static Analysis

Fiscal Year

TY 2022 Revenues with Current Law

Estimated Revenues with Proposed Legislation

Estimated Fiscal Impact Per Year (Proposed Legislation Compared to Current Law)

Cumulative Fiscal Impact  (Proposed Legislation Compared to Current Law)

2025

$244,600,000

$244,600,000

$0

$0

2026

$244,600,000

$240,300,000

($4,300,000)

($4,300,000)

2027

$244,600,000

$224,900,000

($19,700,000)

($24,000,000)

2028

$244,600,000

$222,300,000

($22,300,000)

($46,300,000)

 

The fiscal impact of the proposed rate reduction as depicted in the above table may be overstated or understated for future years depending on whether actual revenue is more or less than the TY 2022 revenue.

 

The Department would need to update all necessary tax return forms and electronic management systems to reflect the change in the BET rate; however, it is not anticipated this will result in any additional administrative costs that could not be absorbed in the Department's operating budget.

 

AGENCIES CONTACTED:

Department of Revenue Administration