New Hampshire Corporate Tax

New Hampshire corporate tax is a critical aspect of doing business in the state, impacting corporations both large and small. While many states impose traditional corporate income taxes, New Hampshire has a unique tax structure that sets it apart. Instead of a typical corporate income tax, New Hampshire levies two main business taxes: the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). These taxes are designed to ensure that businesses contribute fairly to the state’s economy, regardless of their profitability. Understanding these taxes, including how they are calculated, who must file them, and what exemptions and credits are available, is essential for any business operating in New Hampshire.

What is New Hampshire Corporate Tax?

In New Hampshire, the term “corporate tax” typically refers to the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). These two taxes are the primary means by which the state collects revenue from businesses.

• Business Profits Tax (BPT): The BPT is essentially a tax on the net income of businesses operating in New Hampshire. It applies to all business entities, including corporations, partnerships, and sole proprietorships, if their gross business income exceeds a certain threshold. For tax year 2023, the BPT rate is 7.5%. The BPT is similar to a traditional corporate income tax, in that it is based on the profit a business generates after accounting for deductions and expenses.
• Business Enterprise Tax (BET): The BET is a tax on the total value of a business’s enterprise, including compensation paid to employees, interest paid on loans, and dividends paid to shareholders. The BET is unique to New Hampshire and is intended to tax the broader economic activity of a business rather than just its profits. For tax year 2023, the BET rate is 0.55% on the taxable enterprise value. This tax applies to businesses with more than $250,000 in gross receipts or an enterprise value over $100,000.

Who Must File New Hampshire Corporate Tax?

Any business entity that operates in New Hampshire and meets the gross income or enterprise value thresholds must file both the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). This includes:

• Corporations (both C corporations and S corporations)
• Partnerships
• Limited Liability Companies (LLCs)
• Sole Proprietorships
• Nonprofits (if they engage in unrelated business activities)

Even businesses that are not physically located in New Hampshire but generate income from sources within the state may be required to file these taxes. For example, out-of-state businesses that have sales, employees, or property in New Hampshire may be subject to the BPT and BET.

New Hampshire Corporate Tax Rates

As mentioned earlier, New Hampshire’s corporate tax system includes two main taxes, each with its own rate:

• Business Profits Tax (BPT): 7.5% on net business profits for the tax year 2023. This rate applies to all business entities with gross business income over $50,000.
• Business Enterprise Tax (BET): 0.55% on the enterprise value tax base for the tax year 2023. This tax applies to businesses with more than $250,000 in gross receipts or an enterprise value over $100,000.

These rates are subject to change, so it’s important for businesses to stay updated on the latest tax rates and thresholds as set by the New Hampshire Department of Revenue Administration.

How to Calculate New Hampshire Corporate Tax?

Calculating the Business Profits Tax (BPT):

1. Determine Gross Business Income: Start by calculating the total income your business earned during the tax year.
2. Subtract Allowable Deductions: Deduct expenses such as salaries, rent, utilities, and other operational costs to determine your net business income.
3. Apply the BPT Rate: Multiply your net business income by the BPT rate (7.5% for 2023) to determine the tax owed.

Calculating the Business Enterprise Tax (BET):

1. Determine Enterprise Value: Calculate the total compensation paid to employees, interest paid on debt, and dividends paid to shareholders.
2. Apply the BET Rate: Multiply the enterprise value by the BET rate (0.55% for 2023) to determine the tax owed.

Due Dates for New Hampshire Corporate Tax

The due date for filing New Hampshire corporate tax returns is the 15th day of the third month following the end of the corporation’s fiscal year. For calendar-year taxpayers, this typically means the return is due on March 15th. If the due date falls on a weekend or holiday, the deadline is extended to the next business day.

Businesses that need additional time to file can request a six-month extension by filing Form DP-59-A, the Application for Automatic Extension of Time to File New Hampshire Business Tax Return. However, it’s important to note that this extension only applies to the filing of the return, not to the payment of taxes. Businesses must pay any estimated taxes due by the original filing deadline to avoid penalties and interest.

New Hampshire Corporate Tax Exemptions

New Hampshire offers several exemptions and credits that businesses can use to reduce their corporate tax liability:

• Research and Development (R&D) Tax Credit: Businesses that invest in research and development activities may be eligible for a credit against their BPT liability. This credit can be carried forward for up to five years.
• Economic Revitalization Zone (ERZ) Tax Credit: Businesses that create new jobs or make significant capital investments in designated economic revitalization zones may qualify for a credit against both the BPT and BET.
• Coos County Job Creation Credit: Businesses that create new jobs in Coos County, a designated economically distressed area, may be eligible for a tax credit against the BPT.

Failure to file or pay New Hampshire corporate taxes on time can result in penalties and interest charges. The penalty for late filing is generally 5% of the tax due per month, up to a maximum of 25%. Interest is charged on any unpaid tax at a rate determined by the New Hampshire Department of Revenue Administration, which is typically 3% above the federal short-term interest rate.