New Hampshire home to best business tax climate in the region
The Granite State is well positioned to recover from the economic downturn caused by the COVID-19 pandemic.
While the nation suffers from economic uncertainty, New Hampshire has earned recognition as the nation’s sixth-best business tax climate and as tops in the Northeast, according to a Tax Foundation ranking.
During the past two years, tax rates on New Hampshire businesses have decreased, allowing the state to rise in the Tax Foundation’s rankings. The state’s corporate income tax, the Businesses Profits Tax, fell to 7.7% from 8.2% in 2018. The Business Enterprise Tax also dropped to 0.6% from 0.72% in 2018.
These cuts encourage businesses to stay in the state, creating jobs at a time when many were lost to COVID-19 restrictions.
Nationally, Wyoming ranked as the most business tax-friendly state. In the Northeast, New Hampshire easily outranked other states: Pennsylvania was the next-friendliest state at 29th; New Jersey was worst in the nation; and New York was second-worst.
However, new tax initiatives threaten to derail New Hampshire’s upward growth. At a time when business recovery is more crucial than ever, a provision in the 2019 state budget could punish the state’s businesses in the event of an economic downturn.
The budget contained triggers that would increase the Business Profits Tax by 2.6% and the Business Enterprise Tax by 12.5% if state revenues fall by at least 6% below official estimates in Fiscal Year 2020, which ended June 30.
Data from the Department of Administrative Services suggest the state may have barely dodged the automatic tax hike – with revenues falling by 5.4%. The tax hikes would be triggered if revenue is found to have fallen by an additional $15.4 million.
State lawmakers need to step in to prevent this from happening at a time when businesses are facing extreme uncertainty. New Hampshire has made great progress over the years to create one of America best business climates. Raising taxes on businesses drags the state backwards, especially during an economic downturn – the time most economists agree is exactly the wrong time to increase taxes.
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