After a dramatic end to the New Hampshire Legislature’s 2025 session, the state has approved a new two-year budget and several new laws. The budget is divided into two bills: HB 1, which sets funding levels, and HB 2, known as the “Budget Trailer,” which details spending policies.
The New Hampshire Senate passed both bills with a 16-8 vote. However, in the House, the budget agreement narrowly passed with a 185-180 vote. Speaker of the House Sherman Packard broke a tie vote of 183-183 for the Budget Trailer bill to advance it to Governor Ayotte.
The Fiscal Years 2026-27 budget totals $15.9 billion, including $6.16 billion from general and education funds primarily supported by state taxes. Federal funds account for about one-third of the budget.
Discussions between Governor Ayotte and lawmakers focused on state tax revenue projections, especially business taxes. Initially, there was a $500 million difference between the House and Governor on general and education fund spending, with the Senate positioned in between. Ultimately, an agreement was reached on business tax revenue projections at $2.3 billion.
Governor Ayotte’s optimistic revenue forecasts might prove accurate as business tax revenues ended FY 2025 slightly above expectations.
Throughout this session, NFIB NH played an active role in advocating for small businesses against potential tax increases and regulatory burdens. Notably:
1. No increase in small business taxes occurred despite proposals to roll back rate reductions.
2. Proposals to raise workers’ compensation and unemployment insurance payouts were defeated.
3. Mandates requiring payout of unused vacation time upon employment separation were opposed successfully.
4. A new healthcare tax proposal was defeated along with costly health coverage mandates.
Despite these successes for small businesses, challenges remain:
1. A parental time off mandate requires businesses with over 20 employees to provide unpaid leave for pregnancy-related matters.
2. Registration and license fee increases impact small businesses but are lower than initially proposed.
3. Contentious negotiations over police and firefighter pensions led to compromises affecting pension calculations.
4. The elimination of annual vehicle inspections was pivotal in passing the budget in the House.
Efforts to increase housing production included reforms such as establishing a permit decision deadline of 60 days, creating uniform building codes statewide, allowing multifamily developments in commercial zones under certain conditions, expanding rights for detached accessory dwelling units (ADUs), permitting third-party home inspectors, and enabling single stairwell designs in residential buildings up to six stories high.
