This bill proposes significant tax rate changes aimed at increasing revenue for the Education Trust Fund (ETF). It reinstates the Interest and Dividends Tax at a rate of 5% for taxable periods ending on or after December 31, 2025, and increases the Business Profits Tax from 7.5% to 8.5%, the Business Enterprise Tax from 0.55% to 0.75%, and the Meals and Rooms Tax on meals from 8.5% to 9.0%, effective July 1, 2025. The bill mandates that all additional revenue generated from these tax increases will be allocated to the ETF, with specific provisions stating that 41% of the revenue from the initial portions of the Business Profits and Business Enterprise taxes will go to the ETF, while 100% of the revenue from subsequent increments will also be directed to the fund. The bill deletes previous tax rates for the Business Profits Tax and Meals and Rooms Tax, replacing them with the new rates.

Additionally, the bill introduces a new tax structure distinct from the repealed Income and Dividends tax, suggesting it should be named differently and established under a new RSA to avoid taxpayer confusion. It does not re-enact several provisions related to taxable income and exemptions from the previous tax. The Department of Revenue Administration will analyze the fiscal impact of this new tax as a separate entity, and it has provided estimates for the potential revenue impact from FY 2025 through FY 2027. The bill also includes administrative provisions for informing taxpayers about the reinstatement of the Interest and Dividends tax and suggests moving certain language related to ETF distributions for clarity. Overall, the bill aims to enhance education funding while adjusting tax rates and revenue allocations, leading to an indeterminable fiscal impact on both the General Fund and ETF.

Statutes affected:
Introduced: 77-A:2, 77-A:20-a, 77-E:14, 78-A:6