You may not think about New Hampshire state income tax much, or lack thereof. But if you own a sole proprietorship or real estate such as a rental property, you may be generating income that’s subject to the New Hampshire Business Profits Tax and Business Enterprise Tax.

New Hampshire State Income Tax Filing Requirements

There is typically no New Hampshire state income tax withheld on wages and salaries, and many people choose to live in the state to avoid paying on it. However, individuals who own a sole proprietorship or are a sole owner of a single member LLC that has business activity in New Hampshire may have a filing requirement for the following:

  • Business Profits Tax (BPT)
  • Business Enterprise Tax (BET)

There are filing thresholds for each tax type that may change each year.

BPT and BET Thresholds

The BPT threshold is based on gross business income. On the other hand, the BET threshold is based on an enterprise value tax base. The business enterprise calculates its enterprise value tax base under New Hampshire regulation by adding up all compensation paid or accrued, all interest paid or accrued, and all dividends paid. The filing threshold for the 2023 tax year is as follows:

  • $103,000 of business income (BPT)
  • $281,000 of enterprise tax value base (BET)

Personal Services Deduction

If you meet the filing requirement for the BPT return, you may also qualify for the personal services deduction. This could reduce the amount of tax you owe on your business income. According to the New Hampshire revised statute section 77-A:4, this deduction is for total compensation that is “reasonable and fairly attributable” to its proprietor. Taking the full amount of this deduction requires that you maintain records necessary to prove that this deduction is reasonable.

New Hampshire State Income Tax: Get More Details

Want more information regarding potential exposure to BPT and BET tax liabilities? Call (401) 921-2000 or fill out our contact form to learn how you can decrease your potential tax liability.