Income/Franchise:
New Hampshire: Adopted Rules Reflect IRC §163(j) Decoupling and Market-Sourcing Apportionment for Financial Institutions

Revised Rev 303.06 and 304.10, N.H. Dept. of Rev. Admin. (4/26/24). The New Hampshire Department of Revenue Administration (Department) adopted an administrative rule reflecting state legislation enacted in 2023 [see S.B. 189 (2023) / Chapter 169 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, added text provides the following:l

“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.”

The Department also adopted changes to its rule on computing special industry apportionment of financial institutions to reflect the market-based sourcing apportionment methodology adopted by 2019 state legislation. Please contact us with any questions.