New Hampshire recently doubled the maximum amount of tax credits available for research and development activities, from $1 million annually to $2 million. Originally enacted in 2007, it was set to expire in 2015, but the tax credit has been extended permanently.
New Hampshire's Research and Development (R&D) credit has widespread support in the state and among state legislators. It reflects the increasing impact and importance of technology on the New Hampshire economy.
How the R&D credit works
The credit may be used against the business profits tax, and, if there is any remaining amount, it may also be used against the business enterprise tax. Further unused amounts may be carried forward for five years.
The New Hampshire credit is based upon costs claimed for the federal R&D credit, but uses only the wages expense in the calculation. The New Hampshire credit cannot exceed 10% of the wages claimed for federal R&D purposes, to a maximum of $50,000, and must be for R&D activities performed within the state.
Applicants for the credit must apply by June 30 of each year to the New Hampshire Department of Revenue (DOR). That application must reflect costs incurred in the last tax year to end prior to that date. The DOR then awards each applicant's share of the available credit amount pro-rata based on all applications received for that year. The awards are typically announced in late summer or early fall, allowing taxpayers with calendar-year returns to file by the extended date due and claim any newly awarded credit on that return.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
