Posted by Jeffrey Feingold on 02.21.25
New Hampshire offers a research and development (R&D) tax credit for qualified R&D expenditures made within New Hampshire during the fiscal year. This credit reduces the tax burden for eligible taxpayers by covering wages that meet federal credit requirements. The program reflects the state’s commitment to fostering an environment where businesses and entrepreneurs can pursue innovation and growth. The R&D Tax Credit is designed to stimulate the economy by attracting new companies to the region and encouraging existing ones to expand.
Since the R&D program began in 2008, 3,095 applicants have received tax credits. However, if the total claims exceed the available funding, credits are reduced proportionally. Every year, applications for the credit have surpassed the available award value, sometimes by nearly $4 million, leading to companies receiving only a fraction of the amount they could potentially claim.
It has been eight years since the state last increased the value of all R&D tax credits and 17 years since the hard cap on the amount an entity can claim was raised. As a result, the credit amount is now insufficient to remain competitive. Failing to increase the tax credit value may hinder future innovation in the life sciences sector and lead to the state losing high-quality jobs.
Senate Bill 276 addresses this issue by increasing the R&D tax credit for qualified businesses in New Hampshire. Specifically, the bill raises two key monetary thresholds: it increases the total aggregate value of R&D tax credits that all taxpayers can claim from $7 million to $10 million per fiscal year, and it raises the maximum credit amount that an individual entity can claim from $50,000 to $100,000. Under the new tax credit structure, companies can offset their tax liability by up to 10% of their qualified R&D expenses that exceed a base amount. Additionally, credits can be carried forward and applied in the subsequent five tax years. Businesses must apply for the credit by June 30 following the tax year in which the R&D occurred, and final credit amounts will be determined by the state by September 30 each year. The bill is set to take effect on January 1, 2026, and it is expected to decrease state tax revenue by up to $3 million in its first year, though the exact financial impact is considered indeterminable by the Department of Revenue Administration.
The life sciences industry is attracting top tier talent and innovative businesses to New Hampshire, leading to groundbreaking discoveries with global implications. This tax credit program, along with the state’s other business friendly policies, strategically positions New Hampshire as an attractive destination for pioneering companies in medical device manufacturing, healthcare, biotechnology, pharmaceuticals, and diagnostics.
Passing SB 276 will demonstrate New Hampshire's commitment to becoming a national hub for life sciences and leading the way in the development of lifesaving services, treatments, drugs, devices, and other health technologies.
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.
