SB 652 — changing the maximum award of tax credits for overpayment of due taxes.

CHAPTER 115 SB 652-FN - VERSIONFINAL ADOPTEDVERSION BY BOTH BODIES SESSION 26-3254 07/09 SENATE BILL 652-FN AN ACT changing the maximum award of tax credits for overpayment of due taxes.

CHAPTER 115 SB 652-FN - VERSIONFINAL ADOPTEDVERSION BY BOTH BODIES 26-3254 07/09 STATE OF NEW HAMPSHIRE In the Year of Our Lord Two Thousand Twenty-Six AN ACT changing the maximum award of tax credits for overpayment of due taxes.

1115:1 Business Profits Tax;

2115:2 Effective Date.

LBAApproved: 26-3254 Revised 3/4/26 SB 652-FN- FISCAL NOTE AS INTRODUCED AN ACT changing the maximum award of tax credits for overpayment of due taxes.

FISCALMay IMPACT:28, 2026 CHAPTER 115 SB 652-FN - FINAL VERSION - Page 2 - Effective Date:

EstimatedJuly State27, Impact FY 2026 FY 2027 FY 2028 FY 2029 Revenue $0 $0 $0 Indeterminable Increase Revenue Fund(s) General Fund and Education Trust Fund Expenditures* $0 $0 $0 $0 Funding Source(s) None Appropriations* $0 $0 $0 $0 Funding Source(s) None *Expenditure = Cost of bill *Appropriation = Authorized funding to cover cost of bill METHODOLOGY:

This bill amends the credit carryforward limits for the Business Profits Tax and Business Enterprise Tax.

Currently the credit carry forward limit is 500% with further decreases scheduled to a 250% limit for taxable periods ending on or after December 31, 2029 and to a 100% limit for taxable periods ending on or after December 31, 2031.

This bill will change the credit carryforward limits to be the following:

Taxable Period Ending Credit Carryforward Limit December 31, 2029 450% December 31, 2031 400% December 31, 2033 350% December 31, 2035 300% December 31, 2037 250% December 31, 2039 200% December 31, 2041 150% The Department of Revenue Administration states that it is unable to predict the exact future impact of this change.

Using Tax Year (TY) 2023 data, the Department is able to provide an estimated impact assuming that tax year liability will remain static and that taxpayer behavior will not change in response to the current or proposed law phase-ins.

The Department notes this bill does not produce new revenue, it results in a decrease of refunds issued from the General Fund and Education Trust Fund therefore increasing the net revenue recognized for fiscal years through 2044 by an estimated $54.1 million.

The Department states the refund impact related to a given tax year are typically experienced over the following three fiscal years.

On TY 2023 tax returns, at the 500% limit, to date 19,566 taxpayers have carried forward $482.5 million in overpayments in fiscal years 2024 through 2026.

Had the stricter limits in current law been in place, 6,446 of these taxpayers would have had a portion of their overpayments refunded resulting in $129.2 million in additional refunds.

Of this total:

 41.3% of affected taxpayers had or will have a credit carryforward in excess of 250% of their TY tax liability, which equates to $30.6 million of additional refunds;

and  100% of affected taxpayers had or will have a credit carryforward in excess of 100% of their TY tax liability, which equates to $98.6 million of additional refunds.

If this bill had been law, 4,285 of these taxpayers would have had their overpayments refunded resulting in $75.1 million in additional refunds.

Of this total:

 22.3% of affected taxpayers had or will have a credit carryforward in excess of 450% of their TY tax liability, which equates to $2.8 million of additional refunds;

 25.6% of affected taxpayers had or will have a credit carryforward in excess of 400% of their TY tax liability, which equates to $3.6 million of additional refunds;

 29.6% of affected taxpayers had or will have a credit carryforward in excess of 350% of their TY tax liability, which equates to $5.6 million of additional refunds;

 34.7% of affected taxpayers had or will have a credit carryforward in excess of 300% of their TY tax liability, which equates to $8.3 million of additional refunds;

 41.3% of affected taxpayers had or will have a credit carryforward in excess of 250% of their TY tax liability, which equates to $10.3 million of additional refunds;

 50.7% of affected taxpayers had or will have a credit carryforward in excess of 200% of their TY tax liability, which equates to $14.6 million of additional refunds;

and  66.5% of affected taxpayers had or will have a credit carryforward in excess of 150% of their TY tax liability, which equates to $29.8 million of additional refunds.

Using TY 2023 data for all years, the table below shows the fiscal impact that could be experienced under current and proposed law by fiscal year based on when returns were received for TY2023.

The fiscal impact does not reflect the background rate of refunds—refunds for taxpayers who have credit carryforwards in excess of 500%, as current law, which has been in effect since tax year 2022, already requires any amounts above 500% to be fully refunded when the return is received.

Estimated Refunds Estimated Refunds Fiscal Released By Fiscal Released By Fiscal Year Year Current Law Year Proposed Law Variance $(1,500,000) $(100,000) $1,400,000 (23,900,000) (2,200,000) 21,700,000 (9,900,000) (600,000) 9,300,000 (77,200,000) (2,800,000) 74,400,000 (16,700,000) (900,000) 15,800,000 - (4,400,000) (4,400,000) - (1,400,000) (1,400,000) - (6,500,000) (6,500,000) - (1,900,000) (1,900,000) - (8,100,000) (8,100,000) - (2,500,000) (2,500,000) - (11,500,000) (11,500,000) - (3,900,000) (3,900,000) - (23,300,000) (23,300,000) - (5,000,000) (5,000,000) Total $(129,200,000) $(75,100,000) $54,100,000 It is not possible to anticipate how taxpayers may actually respond to the current and proposed future limitations.

Taxpayers may use an available credit carryforward against future tax liabilities in the taxable period in which this proposed change would apply.

Taxpayers could also reduce their future estimate and return payments in anticipation of having to reduce their outstanding credit carryforward.

Finally, a taxpayer may also request a refund of the amounts overpaid in excess of the proposed limitations.

Therefore, the Department is not able to reliably determine how the impact will spread across fiscal years.

AGENCIES CONTACTED:

Department of Revenue Administration