Relative to allowing a business profits tax adjustment for the depreciation deduction permitted under Internal Revenue Code Section 168(k).
Impact
The impact of HB1531 on state laws centers around the modification of how business profits tax is calculated in reference to asset depreciation. By allowing businesses to adopt the IRC Section 168(k) model, the bill is projected to change how businesses account for depreciation in their tax calculations, replacing the existing method which disallowed the immediate deduction. This legislative change is anticipated to generate discussions among stakeholders regarding its fiscal implications, particularly concerning the revenue decrease for the General Fund and Education Trust Fund due to increased deductions eligible under the new law.
Summary
House Bill 1531 (HB1531) seeks to amend the New Hampshire Revised Statutes (RSA) by allowing a business profits tax adjustment specifically for the depreciation deductions as permitted under the Internal Revenue Code (IRC) Section 168(k). Currently, New Hampshire does not allow this depreciation, and the bill establishes that businesses will be able to utilize this section for qualified property placed in service after December 31, 2024. The aim of this legislation is to enhance tax benefits for businesses, creating an environment that could potentially stimulate economic activity by allowing for a complete depreciation deduction in the first year of an asset's service.
Sentiment
The general sentiment surrounding HB1531 appears to be supportive among business advocates who argue that the adjustments in depreciation methods will foster a pro-business atmosphere. However, there may be apprehensions from fiscal conservatives or opponents who are concerned about the indeterminate revenue losses potentially affecting state budgets. The bill represents a broader trend of aligning state tax policies with federal standards, which some view positively, while others argue it could lead to complications in revenue management for the state.
Contention
Notable points of contention regarding HB1531 include discussions about the vagueness of its fiscal impact, with the Department of Revenue Administration stating that the financial consequences are 'indeterminable.' This uncertainty highlights fears regarding the potential long-term effects on state revenue, especially in consideration of economic fluctuations. Critics may argue that while immediate tax relief for businesses is appealing, it could undermine the state’s financial stability in future fiscal years, thereby necessitating further debate within legislative committees.