This bill proposes an increase in the expense deduction cap for business profits tax from $500,000 to $2,500,000 for property placed in service on or after January 1, 2027. This change aligns state law with federal standards under Section 179 of the Internal Revenue Code. The specific legal language amended in RSA 77-A:3-a reflects this adjustment, replacing the previous cap of $500,000 with the new cap of $2,500,000 and updating the effective date for qualifying property from January 1, 2018, to January 1, 2027.

The fiscal impact of this bill is expected to result in an indeterminable decrease in revenue for the General Fund and Education Trust Fund starting in FY 2027. The Department of Revenue Administration estimates that the increase in the deduction limit could lead to a maximum fiscal impact of $8.3 million, although this figure does not account for potential offsets from regular depreciation claims. The Department notes that while the immediate effect of the increased deduction may appear significant, it may ultimately be a timing issue, as businesses will still be able to claim depreciation on disallowed expenses over time. No additional administrative costs are anticipated for the Department as a result of this bill.

Statutes affected:
Introduced: 77-A:3-a
HB1597 text: 77-A:3-a