This bill modifies the application of the United States Internal Revenue Code of 1986 to New Hampshire's business profits tax by shifting from a static to a rolling conformity model. It introduces a new subparagraph (p) to RSA 77-A:1, XX, which stipulates that for all taxable periods beginning on or after January 1, 2027, the Internal Revenue Code will be applied as amended, subject to RSA 77-A:3-a. The bill also repeals and reenacts RSA 77-A:3-a, allowing business organizations to calculate expense deductions under section 179 of the Internal Revenue Code, with a cap of $500,000 for property placed in service on or after January 1, 2027. Additionally, the Commissioner of Revenue Administration is required to file a biennial report with the finance committees of the Senate and House regarding changes to the Internal Revenue Code that may affect New Hampshire.

Moreover, the bill significantly alters the tax treatment of employee remuneration for publicly held companies by eliminating the $1 million deduction limit for any remuneration exceeding this threshold, regardless of whether it is commission or performance-based. It expands the definition of affected entities to include all members of a corporation’s "controlled group," which encompasses partnerships and other noncorporate entities. The bill also introduces a new provision under IRC §168(n) for first-year expensing of qualified production properties, allowing a 100% cost deduction in the first year if the property is maintained as a production asset for at least ten years, expiring after December 31, 2028. The Department of Revenue Administration anticipates these changes will lead to an indeterminable decrease in revenue, with no expected additional administrative costs, as long as updates can be managed within the existing budget.

Statutes affected:
Introduced: 77-A:1, 21-J:3, 77-A:3-b
HB1668 text: 77-A:1, 21-J:3, 77-A:3-b