New Hampshire House lawmakers have approved a measure to trim the state’s Business Enterprise Tax, reviving a familiar debate over how corporate tax policy shapes the state’s economy.
The bill would lower the Business Enterprise Tax (BET) rate from 0.55% to 0.5%. Supporters say the change would give small businesses more breathing room. Critics argue it could chip away at state revenues with uncertain economic payoff.
The BET stands apart from most state-level business taxes. Instead of targeting profits, it applies to compensation — including wages paid to employees and certain payments to owners and shareholders. That structure, according to policy analysts, makes it unusual nationwide.
Phil Sletten, research director at the New Hampshire Fiscal Policy Institute, has described the tax as largely unique among states. He said a rate reduction would likely have the greatest impact on smaller employers, particularly those looking to add a handful of workers rather than expand at a large scale.
An analysis based on 2023 tax filings estimated that cutting the rate would save the average business roughly $565 per year. However, the same study projected that the state would collect about $26 million less in annual revenue as a result.
Economics professor Bruce Sacerdote said those projections appear reasonable, though he noted that such studies often do not account for potential “behavioral responses” — meaning changes in hiring or investment decisions that businesses might make after a tax cut. Even so, he pointed to longstanding economic research suggesting that small shifts in tax rates do not dramatically change labor supply.
Republican Rep. Ross Berry of Hillsborough, who supported the bill, framed the reduction as a direct benefit to local enterprises.
“The overwhelming majority of businesses in New Hampshire are small businesses,” Berry said. He argued that allowing those companies to retain more of their earnings strengthens the broader economy.
From a budgetary perspective, Sacerdote observed that $26 million represents a relatively small share of New Hampshire’s roughly $8 billion in annual state spending. Still, he acknowledged that even modest revenue reductions can concern lawmakers who worry about funding for services.
Democratic Rep. Susan Almy of Lebanon voted against the proposal. She said lowering the rate could eventually force the state to increase fees elsewhere to make up the difference. Rather than reduce the rate, she suggested raising the exemption threshold — currently set at $298,000 in total compensation — so that more small businesses would be excluded from the tax entirely.
That exemption level is adjusted every two years to reflect inflation.
Sletten also cautioned that not all savings from the tax cut would necessarily stay within the state’s economy. A significant portion of BET revenue comes from companies operating across multiple states. As a result, he said, it is difficult to predict where the financial benefit of a rate reduction would ultimately flow.
The measure now moves forward amid broader conversations about New Hampshire’s tax structure and long-term fiscal priorities. Whether the cut produces measurable economic gains — or prompts new budget trade-offs — may only become clear over time.
