Posted by on 02.15.17
In a measure that was approved by the New Hampshire Legislature back in 2015, the total aggregate amount of the state’s research and development (R&D) tax credits will increase to $7 million effective July 1, 2017. The state’s R&D tax credit program is popular—in fact, more manufacturing businesses in the state applied for the R&D credit in 2016 than ever before, far exceeding the current $2 million cap. The $5 million increase provides substantial tax credit opportunities for manufacturers in the state.
Currently, the New Hampshire R&D tax credit applied against the business profits tax (BPT) for qualified manufacturing R&D expenditures limits the aggregate amount of the credit given to taxpayers to $2 million. The state permits taxpayers to apply unused R&D tax credits to the business enterprise tax (BET).
Qualifications
Qualified expenditures are wages paid to employees of the business organization for services rendered in New Hampshire which qualify and are reported as a credit by the business organization under section 41 of the Internal Revenue Code. More specifically, qualified manufacturing R&D expenditures are the wage amounts attributable to New Hampshire that make up lines 5 or 24 of the business organization's Federal Form 6765:
According to the New Hampshire Department of Revenue Administration, “The amount of the credit shall be the lesser of 10 percent of the business organization's qualified manufacturing R&D expenditures or $50,000. In the event that the aggregate amount of credit applied for, in any given fiscal year, exceeds $2 million, all credits for that year shall be reduced proportionately.”
Timing
The credit may be taken against taxes due on account of taxable periods ending on and after September 7, 2007. The credit is first applied against the BPT, and any remainder may be applied against the BET. Unused portions of the credit may be carried forward for up to five years.
According to the New Hampshire Department of Revenue Administration, applications must be postmarked no later than June 30 following the taxable period during which the R&D expenditure was made or incurred. The department will send acknowledgment letters to all applicants by July 31. Applicants will be notified, by mail, of award amounts granted to them by September 30.
The Research and Development Tax Credit Application, Form DP-165, is available on the Department's website on the Forms page and by calling the Department's Forms Line at (603) 230-5001.
Federal R&D Tax Credits
New Hampshire manufacturers may also qualify for federal R&D tax credits. The R&D tax credit can be a lucrative incentive for innovative manufacturing businesses. Given the new permanent nature of the tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities.
Find Out if Your Activities Qualify
Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, contact us at 800-260-4138, or please leave us a message below.
