New Hampshire Businesses Celebrate Newly Raised Cap on Research and Development Tax Credit
New Hampshire businesses are now able to claim up to three times the amount in the state’s research and development (R&D) tax credit. The cap for claims has been raised from $2 million to $7 million, effective July 1.
Although local governor, Chris Sununu, thanked the “Republican leadership of the Legislature” for the increase, the change was in the works long before the current Legislature. 2015 governor Maggie Hassan originally vetoed the budget, stating it was unbalanced due to corporate tax cuts. Eventually, Hassan stood behind the budget with the caveat of having business tax rate cuts aligned with New Hampshire’s fiscal health. Nothing, however, was mentioned regarding the R&D tax credit.
The R&D tax credit helps to strength the economy of small businesses, especially those involved in high-tech. Created in 2008, the state R&D tax credit was originally capped at $1 million. In New Hampshire, 71 businesses applied for the credit during its first year. Following this, the credit cap was lifted to $2 million in 2013, and 155 businesses applied for the credit. It is estimated that this number will grow in the current year, especially with the current credit cap of $7 million.
Businesses are allowed to claim credit for 10% of their research and development costs, to a maximum of $50,000. Interestingly, this maximum has never been reached as the demand for the credit has always been greater than the supply.
Is your business involved in innovative projects relating to research and development of new products or processes? You may qualify for the R&D tax credit. To learn more about the federal and state R&D tax credit incentive program, contact a Swanson Reed Tax Advisor today.