New Hampshire’s tax landscape is characterized by its unique features, distinguishing it from many other states in the United States. The Granite State stands out for not imposing a personal income tax or a general sales tax. However, it does have specific taxes that impact businesses, including the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). 

This blog post delves into the key aspects of New Hampshire’s tax system, exploring the nuances of business taxation, corporate income tax rates, filing deadlines, and the intriguing absence of a sales tax. Understanding New Hampshire’s tax structure is crucial for businesses and individuals seeking to navigate the fiscal terrain of this northeastern state.

What is the New Hampshire Corporate Income Tax Rate?

While New Hampshire does not have a personal income tax, it does have a business and corporate income tax in the form of the Business Profits Tax (BPT). Starting from December 31, 2023, a 7.5% tax applies to income generated from engaging in business activities within the State of New Hampshire. Additionally, for taxable periods ending on or after December 31, 2022, business entities that earn gross business profits from activities both within and outside the state are required to apportion these profits using the single sales factor. In cases where organizations operate as part of a unitary business, they must utilize combined reporting when submitting their New Hampshire business tax return. Partnerships and S-corporations undergo the same treatment as C-Corporations, where the flow-through items listed on Schedule K are included in corporate income during the calculation of taxable business profits.

When is the New Hampshire Business Income Tax Return Due?

Partnership returns in New Hampshire must be filed by the 15th day of the third month following the conclusion of the taxable period. For corporate, proprietorship, fiduciary, and combined returns, the deadline is the 15th day of the fourth month after the taxable period concludes.

How is State Income Tax Nexus Triggered?

The BPT applies to entities with gross business income exceeding a certain threshold.The factors that establish nexus for Business Profits Tax purposes in New  Hampshire include:

• Performing repairs or providing maintenance;
• Owning, maintaining, leasing, or using facilities like a repair shop, parts department, purchasing office, employment or recruiting office, warehousing facilities, meeting places, stock of goods, mobile stores, real property, fixtures, or equipment;
• Collecting current or delinquent accounts;
• Installing merchandise or equipment or supervising such work;
• Conducting training programs, seminars, or lectures for personnel not solely involved in sales solicitation;
• Investigating, handling, or assisting in resolving customer complaints, excluding mediating direct customer complaints solely for ingratiating sales personnel with the customer;
• Approving or accepting customer orders;
• Providing technical assistance or services when not solely for facilitating order solicitation;
• Accepting deposits on customer orders;
• Picking up or replacing damaged or returned property;
• Hiring, training, or supervising personnel, excluding personnel solely involved in solicitation;
• Repossessing property;
• Providing shipping information and coordinating deliveries;
• Maintaining a sample or display room for more than 14 days at one location during the taxable period;
• Carrying samples for sale, exchange, or distribution for consideration;
• Consigning tangible personal property to any person, including an independent contractor;
• Using agency stock checks or any instruments by which sales are made within New Hampshire by sales personnel;
• Maintaining an office or place of business in the home or otherwise publicly attributed to the business organization or its agent, even if exclusive for soliciting orders;
• Conducting activities not entirely ancillary to the solicitation of orders.

Business activities that do not create New Hampshire nexus include:

• Soliciting orders through advertising;
• Carrying samples only for display or distribution without charge;
• Owning or furnishing motor vehicles to sales personnel;
• Submitting inquiries and complaints received to the home office;
• Checking customers’ inventories without a charge for replacement orders;
• Soliciting orders using an in-state resident representative who maintains no in-state sales office or place of business attributable to the business organization;
• Conducting missionary sales activities;
• Maintaining a sample or display room for 14 days or less at one location during the taxable period;
• Recruiting, training, or evaluating sales personnel, occasionally using homes, hotels, or similar places for meetings;
• A representative maintaining an in-home office not paid for by the business organization, not attributable to the organization, or its agents in their agency capacity;
• Mediating direct customer complaints when solely for ingratiating sales personnel with the customer and facilitating orders.

Does Having an IndependentContractor Trigger Nexus?

Independent contractors engaging in activities in New Hampshire on behalf of a business organization will result in the business organization:

Having nexus if the activities involve:

• Maintaining a consignment inventory of the organization’s products for purposes other than display; or
• Entering into any other arrangement extending beyond the solicitation of orders;

Not creating nexus if the activities involve:

• Soliciting and making sales for the business organization; or
• Maintaining their own office.

Are There New Hampshire Income Tax Credits Available?

New Hampshire offers various business tax credits to eligible entities. Here are some examples of business tax credits that were available in New Hampshire:

• Research and Development Tax Credit: This credit is designed to encourage businesses to conduct research and development activities in the state. Eligible businesses may receive a credit against the Business Profits Tax (BPT) or Business Enterprise Tax (BET) for qualified R&D expenditures.
• Job Training Tax Credit: Businesses that provide qualified job training programs may be eligible for a tax credit against the BPT. This credit is aimed at encouraging businesses to invest in the training and skill development of their employees.
• Renewable Energy Tax Credit: Businesses investing in renewable energy projects may be eligible for a tax credit. This credit is designed to promote the use of clean and sustainable energy sources.
• Investment Tax Credit: Certain businesses making qualified investments in property and equipment may be eligible for an investment tax credit against the BPT.
• Child Day Care Facilities Tax Credit: Businesses that contribute to qualified child daycare facilities may be eligible for a tax credit against the BPT. This credit is intended to support the availability of childcare services.
• Education Tax Credit: Businesses that contribute to approved educational scholarship organizations may be eligible for a credit against the BPT. This credit supports educational opportunities for students.
• Economic Revitalization Zone Tax Credit: Businesses located in designated Economic Revitalization Zones may be eligible for tax credits. These credits are aimed at promoting economic development in specific areas.

What is the Sales Tax Rate?

New Hampshire does not impose a state sales tax and also does not enact local sales taxes.

Frequently Asked Questions (FAQs) – New Hampshire Business Taxes

1. Does New Hampshire have a personal income tax?

No, New Hampshire does not levy a personal income tax on earned income. This absence of personal income tax is a defining feature that attracts individuals seeking a tax-friendly environment.

2. What are the primary business taxes in New Hampshire?

The main business taxes in New Hampshire include the Business Profits Tax (BPT) and the Business Enterprise Tax (BET). These taxes are designed to assess the profits and enterprise value of businesses operating within the state.

3. Are there any corporate income tax credits available in New Hampshire?

Yes, New Hampshire offers various business tax credits to eligible entities. These include credits for research and development, job training, renewable energy investments, qualified investments, support for child daycare facilities, contributions to educational scholarship organizations, and economic revitalization zone participation.

4. Why is New Hampshire known as a unique state regarding sales tax?

New Hampshire stands out for not imposing a state sales tax, making it one of the few states in the U.S. without this form of taxation. Additionally, the state does not enact local sales taxes, contributing to its reputation as a tax-friendly destination for shoppers and businesses alike.

5. Can you help with state taxes?

If you have questions about New Hampshire or any state taxes, book a consultation today. View our services page for more information on the various types of consultations and tax optimization services available at Optic Tax.