Income/Franchise:
New Hampshire: Proposed Rule Reflects Recent Decoupling from IRC §163(j) Business Interest Expense Deduction

Initial Proposal to Adopt Rev 303.06, N.H. Dept. of Rev. Admin. (1/19/24). The New Hampshire Department of Revenue Administration released initial proposed text of an administrative rule reflecting state legislation enacted in 2023 [see S.B. 189 (2023) / Chapter 163 and State Tax Matters, Issue 2023-31, for more details on this legislation] that permits a New Hampshire business profits tax (BPT) taxpayer to fully deduct its business interest expense in the year it is incurred, thereby decoupling from the limitations on the deduction of business interest expense under Internal Revenue Code (IRC) section 163(j), for tax years beginning on or after January 1, 2024. Specifically, the proposed text provides the following:

“A business organization with a fiscal tax period that begins before, and ends on or after, January 1, 2024 and has a carry forward of disallowed business interest under section 163(j) of the IRC at the end of such fiscal tax period, shall be allowed as a deduction of such disallowed business interest expense, under RSA 77-A:4, XX, in 3 equal parts over 3 consecutive years, beginning with the first taxable period commencing on or after the end of said fiscal period.”

Written comments on the proposal are due by March 15, 2024, and a related public hearing is scheduled for March 8, 2024. Please contact us with any questions.