In October, the New Hampshire House Ways and Means Committee voted to advance a proposal that would reduce the state’s Business Enterprise Tax (BET) rate from 0.55% to 0.50%.

The proposal, HB 155, is sponsored by Rep. Joe Sweeney (Salem). Lawmakers decided to hold the bill in committee earlier this year while they hashed out future revenue projections and figured out the state budget.

NFIB NH testified in favor of the BET cut earlier this year and continues to support reducing the tax burden on small businesses across the state.

The BET is essentially a payroll tax assessed on “the sum of all compensation paid or accrued, interest paid or accrued, and dividends paid.” In Tax Year 2022, the BET Base was $42 billion.

Reducing the rate to 0.50% is estimated to save employers $46 million over the first three years. Lawmakers amended the proposal so the cut would take effect for Tax Year 2027, a year later than initially proposed.

That delayed effective date reflects uncertainty about state revenue projections adopted during the budget process earlier this year. Through the first three months of the current state fiscal year, business tax revenues are $25.5 million below estimates and $21 million below collections in the previous fiscal year.

Lawmakers split along partisan lines, with Republicans supporting and Democrats opposing the rate reduction. Republicans said the bill will give small employers much needed relief and help make our business taxes more competitive.  Democrats on the committee argued that business tax cuts have cost the state too much money, reduced state aid to schools and local governments, and contributed to the shortfall in tax revenue.

As explained by the Josiah Bartlett Center, since the state began reducing business tax rates in 205, business tax revenues have more than doubled, aid to schools and local governments has increased, and the business share of all state general and education fund revenue has grown by 40%.

The BET rate cut proposal will go to the House floor for a vote next year.