NH Department of Revenue Administration Develops Comprehensive Guide Detailing 2023 Tax Changes

Concord, NH – Following an active legislative session marked by a number of tax-related bills, the New Hampshire Department of Revenue Administration (NHDRA) created a comprehensive reference guide summarizing relevant tax modifications for 2023. NHDRA outlines 15 bills in its Technical Information Release (TIR), including changes in the timeline for the phased elimination of the Interest & Dividends Tax and the allocation of funds to the Education Trust Fund.

“The NHDRA has developed a tax guide that provides businesses and individuals with a clear roadmap through the constantly evolving tax landscape,” said NHDRA Commissioner Lindsey Stepp. "Our primary goal remains to keep the public well-informed about issues that directly impact them, and we are dedicated to enhancing communication between NHDRA and the wide range of taxpayers and professionals we diligently support."

Below are key legislative initiatives from the recent session. To access the complete report, please visit www.revenue.nh.gov/tirs.

Interest & Dividends Tax
House Bill 2 repeals the Interest and Dividends Tax (I&D Tax) effective taxable periods beginning after December 31, 2024. This bill accelerates the timeline for the eventual phasing out of the I&D Tax that was enacted through Laws of 2021, Chapter 91, Sections 89 through 102. This legislation eliminates the prior law’s plans to reduce the tax rate to 2% in 2025 and 1% in 2026.

The Interest and Dividends (I&D) Tax is 4% for taxable periods ending on or after December 31, 2023, and 3% for taxable periods ending on or after December 31, 2024. The I&D Tax is then repealed for taxable periods beginning after December 31, 2024. This bill also amends the effective date of the removal or repeal of references to the I&D tax in other state statutes.

Business Tax
Historically, the allocation of funds to the Education Trust Fund has been contingent upon tax rates for the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). Any adjustments in tax rates had a corresponding effect on the allocated funds. Effective July 1, 2023, House Bill 2 establishes a fixed allocation, requiring 41% of the proceeds from both BPT and BET be directed to the Education Trust Fund, regardless of changes in tax rates.

Senate Bill 189 further amends the BPT by eliminating the limitation imposed through the Internal Revenue Code (IRC) §163(j) on the New Hampshire deduction of business interest expense. This amendment is effective January 1, 2024.

Municipal and Property

House Bill 197 amends certain property tax exemptions by allowing a person eligible for a property tax exemption for the blind, disabled, deaf or severely hearing impaired, or elderly a prorated exemption amount if they own a fractional interest in the property. This provision does not need to be adopted by the municipalities and begins with the property tax year, April 1, 2024.

Miscellaneous

Senate Bill 52, in part, established a committee to study options to finance electric vehicle charging stations. This committee will evaluate various possibilities, including allocating funds from hospitality and dining taxes and encouraging businesses to invest through Business Enterprise or Business Profits Tax credits or by allowing local property tax exemptions.

About the New Hampshire Department of Revenue Administration
The New Hampshire Department of Revenue Administration (NHDRA) is responsible for fairly and efficiently administering the tax laws of the State of New Hampshire. NHDRA collects approximately 80% of New Hampshire’s general taxes. During Fiscal Year 2022, NHDRA collected $2.9 billion in taxes, most of which went to the New Hampshire General Fund and Education Trust Fund. NHDRA also assists municipalities in budgeting, finance and real estate appraisal. NHDRA administers and collects the following taxes at the state level: Business Enterprise Tax, Business Profits Tax, Communications Services Tax, Interest and Dividends Tax, Meals and Rooms Tax, Medicaid Enhancement Tax, Nursing Facility Quality Assessment, Tobacco Tax, Taxation of Railroads, Utility Property Tax, Real Estate Transfer Tax; and the following taxes at the local level: Property Tax, Excavation Tax, Timber Tax. To learn more about NHDRA, please visit www.revenue.nh.gov.

Press Release

Jeff Mucciarone
Mobile: (413) 454-4179
jeff@montagnepowers.com