Business taxes comprise more than a third of New Hampshire’s state tax revenue, making New Hampshire more reliant on corporate tax revenue than any other state. But when business profits drop or tax reductions are passed, the impacts may be felt by Granite Staters through reduced public services or higher property taxes.
Today, the New Hampshire Fiscal Policy Institute released a new explainer video that breaks down the role New Hampshire’s business taxes have in the State Budget, why they matter for funding things like schools and roads, and which types of businesses are likely to be paying the most.
WATCH:
This blog serves as a companion piece to the video and includes links, references, and explanations of specific facts and figures in the video.
“New Hampshire’s State Budget is more than just numbers on a page. Policymakers decide how much to invest in education, roads, and other public services.”
The New Hampshire State Budget for State Fiscal Years 2024-2025 appropriates about 23 percent of all funding, or $3.47 billion over two years, to education-related expenditures, including aid to local public school districts and to the public university and community college systems. About 10 percent of funding, or $1.54 billion, supports transportation. The remaining appropriations support health and social services, justice and public protection, resource protection and development, and general government operations.
Policymakers are required by State law to fund planned expenditures with expected revenues in the State’s operating budget. The operating budget is not allowed to use debt to fund operations. The Capital Budget and the Ten Year Transportation Improvement Plan are separate pieces of legislation outside of the State Budget.
Learn more about New Hampshire’s State Budget in the chapter about the State Budget in the 2025 edition of New Hampshire Policy Points, as well as in NHFPI’s 2017 publication Building the Budget: New Hampshire’s State Budget Process and Recent Funding Trends.
“But revenue varies from year to year because of all the different ways taxes are collected.”
New Hampshire has a variety of tax and non-tax revenue sources. While a few sources, including the Statewide Education Property Tax, bring in a fixed or otherwise similar amount of revenue each year, other sources are typically impacted by changes in economic activity.
Learn more about how New Hampshire raises revenue in the chapter about the Funding Public Services in the 2025 edition of New Hampshire Policy Points, as well as from the July 2024 presentation Funding Public Services in New Hampshire at the State and Local Levels and from NHFPI’s 2017 publication Revenue in Review: An Overview of New Hampshire’s Tax System and Major Revenue Sources.
“New Hampshire relies on taxes on businesses for about 36 percent of State tax revenue, and most of these taxes are collected on profits.”
The U.S. Census Bureau collects information about tax receipts from all fifty states quarterly and annually. The data presented in this analysis are from the Bureau’s 2023 Annual Survey of State Government Tax Collections. Both New Hampshire Business Profits Tax and Business Enterprise Tax revenues are included in State corporate tax revenue collections counted by the U.S. Census Bureau.
“Since profits vary, there is a lot of uncertainty.”
Several measures of corporate profits exist, but a commonly-used measure for national profits is “corporate profits with inventory valuation and capital consumption adjustments.” For example, this measure is used by the U.S. Bureau of Economic Analysis to measure National Income. To understand recent volatility in national corporate profits, see the U.S. Federal Reserve Bank of St. Louis’s FRED database for quarterly updates to national corporate profits.
Corporate taxes are generally the most volatile major source of State tax revenue, in part due to profits shifting faster than other components of economic activity in response to recessions or elevated demand for goods and services.
“Compared to the other 49 states, New Hampshire relies the most on business tax revenue. The next state is New York, with only 19 percent of its tax revenue coming from corporate taxes.”
These data are drawn from the U.S. Census Bureau’s 2023 Annual Survey of State Government Tax Collections. They represent corporate tax revenue as a percentage of all tax revenue, excluding federal funds and non-tax revenue sources states have to support their budgets. New Hampshire typically has the highest percentage reliance in the country, but does not have the highest corporate tax rate or collect the most revenue from corporate taxes.
“When corporations have record-breaking profits, as they have in recent years nationwide, New Hampshire tax revenue grows, which helps address pressing public service needs.”
U.S. corporate profits, as measured by the U.S. Bureau of Economic Analysis and in the U.S. Federal Reserve Bank of St. Louis’s FRED database, rose about 55 percent in the last five years, from approximately $2.5 trillion in 2019 to $3.8 trillion in 2024. New Hampshire tax revenues from the combined Business Profits Tax and Business Enterprise Tax revenues increased 52 percent from State Fiscal Years 2019 to 2024.
“But when these revenues decrease, it hurts hardworking Granite Staters through reductions in services or downshifting to local property tax payers.”
Falling business tax revenues have contributed to lower projected revenues for the State Fiscal Years 2026-2027 State Budget biennium. While the next State Budget has not been finalized, the State Budget proposal passed by the House of Representatives includes reductions in funding for services, including health services and higher education, as well as increased fees and less money distributed in municipal aid to cities and towns than likely would be under current policy.
“Since 2015, New Hampshire State legislators have continued to reduce the two primary business taxes.”
The Business Profits Tax rate in 2015 was 8.5 percent. Policymakers lowered the tax rate to 8.2 percent in 2016, 7.9 percent in 2018, 7.7 percent in 2019, 7.6 percent in 2022, and 7.5 percent in 2023. The Business Enterprise Tax rate was lowered from 0.75 percent in 2015 to 0.72 percent in 2016, 0.675 percent in 2018, 0.6 percent in 2019, and 0.55 percent in 2022. To learn more, read NHFPI’s August 2023 analysis State Business Tax Rate Reductions Led to Between $496 Million and $729 Million Less for Public Services.
“Legislators also eliminated the Interest and Dividends Tax, a change that primarily benefits the wealthiest citizens.”
The Interest and Dividends Tax was a tax on the income of individuals, joint filers, and specific types of business entities that is generated from the ownership of certain assets. Established in 1923, the Interest and Dividends Tax had a tax rate of 5 percent from 1977 to 2022, dropping to 4 percent in 2023 and 3 percent in 2024 as part of an eventual phaseout plan enacted in the State Fiscal Years 2022-2023 State Budget. A change to statute included in the Trailer Bill of the State Fiscal Years 2024-2025 State Budget accelerated the phaseout, and the tax was repealed entirely in 2025.
Fundamentally, to be required to pay Interest and Dividends Tax, an individual, household, estate, or partnership must have wealth that generates sufficient income to be taxable without new labor and without selling an asset, as income generated from those activities are not taxable.
More than half of the tax revenue during Tax Year 2022 was paid by households with taxable interest, dividend, and distribution income of at least $200,000. Key common retirement plans, including Individual Retirement Plans and certain employee benefit plans, were not taxable. To generate $200,000 in interest, dividends, and distribution income from income-generating wealth, even relatively high rates of return would require several million dollars in assets generating taxable income.
Economic modeling based on federal tax returns indicates that more than nine of out every ten forgone dollars with the tax’s repeal benefit the top 20 percent of households by income, and more than half of the dollars uncollected with the tax’s repeal benefit the top 1 percent of households.
Learn more in NHFPI’s presentation to the House Ways and Means Committee and in NHFPI’s March 2023 analysis Households with High Incomes Disproportionately Benefit from Interest and Dividends Tax Repeal.
“The reductions in business taxes alone have cost public services between about $800 million and nearly $1.2 billion since those 2015 cuts.”
These estimated forgone revenue figures are calculated in NHFPI’s April 2025 Issue Brief Business Tax Rate Reductions Led to Between $795 Million and $1.17 Billion in Forgone Revenue for Public Services Since 2015. This analysis used the most recently-available data to update estimates from NHFPI’s August 2023 research State Business Tax Rate Reductions Led to Between $496 Million and $729 Million Less for Public Services. The 2023 analysis examined the relationship between corporate tax rates and economic growth in studies from other states and using New Hampshire-based data. For a comprehensive understanding of the source for these forgone revenue figures, read these two analyses.
“Between 2015 and 2023, other New England states saw a 172 percent increase in state-level corporate tax revenues, and there was a 192 percent increase among all the states. But New Hampshire business tax revenues only increased 124 percent in the same period.”
These figures are a combination of U.S. Census Bureau data and New Hampshire state data. For more details, see NHFPI’s April 2025 Issue Brief Business Tax Rate Reductions Led to Between $795 Million and $1.17 Billion in Forgone Revenue for Public Services Since 2015.
“This highlights how a tax change can mean less for priorities like education, housing, roads, and bridges. When we hear business taxes, we might picture impacts on small, local businesses. However, about 5 percent of business tax filers paid nearly 80 percent of all business tax revenue collected, suggesting larger filers pay most of these taxes.”
More than three quarters of the combined business tax revenues come through the Business Profits Tax. Business Profits Tax revenues have risen much faster than Business Enterprise Tax revenues, which have faced more substantial rate reductions as a percentage of the original total. Large entities with significant profits provide most Business Profits Tax revenues. In Tax Year 2022, about 1,152 filers, or 1.5 percent of all filers, paid 76.7 percent of all Business Profits Tax revenues, and 119 (0.2 percent) paid 40.3 percent of all revenues collected. About 7.1 percent of filers were complex, multi-component businesses, also known as “Water’s Edge” filers, many of which were likely operating in multiple states or countries; this 7.1 percent of filers paid 58.4 percent of all revenue collected.
To learn more about the breakdown of Business Profits Tax and Business Enterprise Tax filers, see the New Hampshire Department of Revenue Administration’s Annual Reports. These data reflect the most recent report, the 2024 Annual Report, which shows data from Tax Year 2022.
“Household, state, and local budgets are all part of the same ecosystem, and lost tax revenue must come from somewhere, like higher property taxes. Public policy decisions have a real impact on hardworking Granite State families, particularly those with low and moderate incomes.”
For overviews of how New Hampshire raises money and the fiscal relationships between State and local governments, see NHFPI’s 2025 edition of New Hampshire Policy Points and the July 2024 presentation Funding Public Services in New Hampshire at the State and Local Levels.
For the latest data and analysis on New Hampshire business taxes, make sure to subscribe to NHFPI’s newsletter at www.nhfpi.org/subscribe.