Understanding New Hampshire corporate tax is imperative when you are starting and/or fully operating a business within this state. Practicing due diligence in regards to your corporation's taxes will allow you to avoid additional fees and remain in good standing. To ensure long-term growth and success, here's what you need to know about corporate tax in the state of New Hampshire.

New Hampshire Corporate Tax: Introduction

In most states, a corporate income tax is applied to corporations. In comparison, personal income from pass-through entities, including limited liability companies (LLCs), S corporations, partnerships, and sole proprietorships, are subject to a state's tax. The tax rate applied varies from state to state.

Generally, corporate taxes are a flat rate, ranging from around 4% to 10%. This rate typically remains the same, regardless of how much a company makes. However, personal rates tend to depend on how much income is made, ranging from zero percent to around nine percent or more in certain states.

At this time, there are six states that do not have a corporate tax. These include Nevada, Ohio, Texas, Washington, South Dakota, and Wyoming. In addition, five states do not have a personal income tax. These include South Dakota, Nevada, Texas, Wyoming, Washington, and Alaska.

Individuals in Tennessee and New Hampshire are only taxed in relation to dividend income and on interest. There is also a franchise tax that is applied in some states. This tax simply gives businesses the privilege to conduct business in that state. Once again, this tax is generally a flat fee or it may be based on a business's overall net worth.

For those running a New Hampshire-based business, you may be subject to two annual taxes, including a business profits tax (BPT), as well as a business enterprise tax (BET). Once these taxes are applied, if there is any remaining income passed through to you personally, that amount will not be subject to any taxation.

For your reference:

  • For partnerships, BPT returns are due on the 15th day of the 3rd month (preceding the end of the applicable tax period).
  • For all other business entities, BPT returns are due on the 15th day of the 4th month (preceding the end of the applicable tax period).
  • Businesses are required to file a BET if their business showcases taxable income of more than $104,000. Alternatively, filing a BET is also required when the business has more than $208,000 in gross business receipts.
  • Corporate income tax in New Hampshire is applied to the gross taxable income. This is typically applied to most corporations and business's registered or conducting business within the state. This tax is the equivalent of the New Hampshire personal income tax, which is based on a bracketed system.
  • The personal income tax rate in New Hampshire is five percent on interest and dividend income.

New Hampshire Corporate Tax: C-Corporations

When it comes to corporate taxes, the most common business structure is a C corporation. This type of entity pays corporate taxes on the company's revenue, in addition to the personal income tax which shareholders pay on their withdrawn profits. This is a phenomenon known as double taxation.

In comparison, S corporations and other "flow-through" entities do not face double taxation. In these cases, corporate taxes are not paid in relation to the company's revenue. However, each individual shareholder must still report their share of income on their personal tax returns and pay the associated federal and state income tax.

New Hampshire Corporate Tax: S-Corporations

In most states, to form an S corporation, you must first form a C corporation and then file to elect S status. This is completed through the IRS. As discussed, the main benefit of doing so is avoiding double taxation. Although most states consider this type of business structure to be a pass-through entity, New Hampshire is unique. This state does not recognize S status. This means that all corporations are subject to the same taxes.

Whether you plan to form an LLC, an S corp, or a C corp, it is important that you understand your obligations in terms of taxation. To ensure that you have all of the required paperwork (or if you are a unique case), it is recommended that you seek a professional opinion. This is particularly true if you have yet to file your first return.

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