Relative to increasing the amount of the expense deduction allowed against the business profits tax.
Impact
The bill is expected to have a considerable fiscal impact on state revenues, particularly affecting the General Fund and Education Trust Fund. While the Department of Revenue Administration acknowledges that the overall effect on revenue will be indeterminable, estimates suggest that FY 2025 and beyond could see substantial revenue decreases as businesses take advantage of the higher deduction limit. The fiscal note indicates the potential maximum fiscal impact could reach around $4.7 million due to the increased deductions allowed, although exact figures are difficult to predict due to variables in future business activities and tax compliance.
Summary
House Bill 1536 (HB1536) proposes to increase the allowable expense deduction for businesses against the business profits tax (BPT) from $500,000 to $1,000,000 for property placed in service on or after January 1, 2025. This change aligns New Hampshire with Section 179 of the Internal Revenue Code, allowing businesses to deduct larger amounts for certain assets, thereby potentially reducing their taxable income significantly. The bill aims to relieve financial burdens on businesses, particularly smaller enterprises that might benefit from accelerated depreciation of their business property.
Sentiment
Overall, the sentiment around HB1536 is largely positive among business advocates and certain legislators who argue that increasing the deduction will promote investment and spur economic growth in the state. Proponents believe that the measure supports small businesses and enhances their capacity to reinvest in operations, ultimately benefiting the state's economy. However, critics are concerned about the long-term implications for state revenue and whether such tax breaks are sustainable or beneficial for the overall public good.
Contention
Key points of contention in discussions surrounding HB1536 include the trade-off between immediate tax relief for businesses versus potential long-term revenue losses for the state government. Opponents argue that while the intention of aiding businesses is commendable, the bill could exacerbate existing budgetary concerns and limit funds available for public services. Additionally, they underscore the importance of ensuring that any tax benefits provided to businesses do not negatively impact the state's capacity to provide essential services such as education and healthcare.
To Adopt Federal Income Tax Law Regarding Depreciation And The Expensing Of Property; And To Increase The Amount Allowed For The Expensing Of Certain Depreciable Business Assets To The Amount Allowed Under Federal Law.