The New Hampshire House Ways and Means Committee has advanced a proposal to reduce the state’s Business Enterprise Tax (BET) rate from 0.55% to 0.50%. The bill, known as HB 155, is sponsored by Representative Joe Sweeney of Salem. Earlier this year, lawmakers decided to keep the bill in committee while they worked on revenue projections and the state budget.
The National Federation of Independent Business New Hampshire (NFIB NH) testified in support of the BET cut earlier in the year and continues to advocate for lowering the tax burden on small businesses.
The BET functions as a payroll tax and is assessed on total compensation, interest, and dividends paid by businesses. In Tax Year 2022, the base for this tax was $42 billion. The proposed reduction in the rate is estimated to save employers $46 million over the first three years. Lawmakers amended the proposal so that the cut would take effect in Tax Year 2027, which is one year later than originally planned.
This delay comes amid uncertainty about state revenue projections that were adopted during the budget process earlier in the year. For the first three months of the current fiscal year, business tax revenues are $25.5 million below estimates and $21 million less than collections from the previous fiscal year.
The committee vote reflected partisan divisions: Republicans supported the rate reduction, saying it would provide relief to small employers and improve the competitiveness of state business taxes. Democrats opposed the measure, arguing that previous business tax cuts have reduced state revenue, decreased aid to schools and local governments, and contributed to current shortfalls.
According to analysis from the Josiah Bartlett Center, since New Hampshire began reducing business tax rates in 2015, overall business tax revenues have more than doubled, aid to schools and local governments has increased, and the share of general and education fund revenue from business taxes has grown by 40%.
The proposal will move to the House floor for a vote next year.
