Roughly 4,000 New Hampshire small businesses would no longer pay one of the state’s signature business taxes under legislation that cleared the House and Senate Thursday and now heads to Gov. Kelly Ayotte. Lawmakers stopped short of cutting the Business Enterprise Tax outright, but the package they sent to the governor’s desk raises the tax’s filing threshold, locks in a mechanism for automatic future rate cuts, and spends $2.5 million to shore up Medicaid rates at the state’s nursing homes. NHPR reported the passage as the Legislature wrapped up its final standard voting day of the 2026 session.
The vehicle, House Bill 155, is a smaller bite than the outright rate cut some Republicans wanted. But for the small business owners it covers, the effect is total: they simply stop filing and paying the tax altogether.
What the Business Enterprise Tax is and who pays it
The Business Enterprise Tax is one of New Hampshire’s two main business taxes, alongside the Business Profits Tax. Unlike the profits tax, the BET is levied not on what a company earns but on what it pays out, taxing a business’s wages, interest, and dividends at a flat rate. That structure makes it unavoidable for many small operations that run thin margins but still meet payroll. A landscaping company, a small restaurant, or a two-chair salon can owe BET in a year when it turns no profit at all.
Currently, businesses must file and pay once their gross receipts or enterprise value tax base crosses a $297,000 threshold. HB 155 lifts that threshold to $400,000. Republican leaders expect the change to exempt about 4,000 small businesses from the tax entirely. For those companies, the savings are not just the tax itself but the compliance burden of calculating and filing it, an expense that falls disproportionately on businesses too small to keep an accountant on staff.
Sen. Tim Lang, a Sanbornton Republican, summed up the pitch on the floor, telling colleagues the bill would protect the state’s nursing homes and protect its small businesses.
The nursing home money that almost won Democrats over
The bill’s second major piece directs $2.5 million toward raising Medicaid provider rates for nursing homes, a priority the Senate carried through the session. New Hampshire’s long-term care system has been squeezed for years between rising costs and Medicaid reimbursements that lag what care actually costs, a strain that radiates through the entire healthcare network, as we explored in our look at why Medicaid functions as the foundation of New Hampshire’s healthcare system.
The nursing home funding initially earned the package a measure of Democratic support. That support evaporated when House Republicans attached the bill’s most contested feature: an automatic rate-reduction trigger.
The automatic trigger that split the parties
Under the provision House Republicans added, the BET rate, currently 0.55 percent, would automatically drop by 0.005 percentage points whenever state tax collections beat official estimates by $100 million. The cuts would repeat each time the condition is met, ratcheting downward until the rate reaches 0.25 percent, the level set when the tax was created in 1993. Any reduction would also require the state’s Rainy Day Fund to be at its maximum balance.
Supporters frame the trigger as fiscal discipline: taxpayers get money back only when the state demonstrably collects more than it planned and only when its reserves are full. Critics see a slow-motion revenue drain that future legislatures will have to live with regardless of what budget pressures emerge. Sen. Cindy Rosenwald, a Nashua Democrat, called the rate cuts reckless and irresponsible and warned they could potentially cost hundreds of millions of dollars in the future.
The fight echoes a decade of New Hampshire tax politics. The BET rate has been cut four times since 2016, each time over Democratic objections that the state was trading long-term fiscal capacity for short-term political wins. Republicans counter that the state’s revenues have repeatedly outperformed projections even as rates fell. The trigger mechanism effectively writes that argument into law: if revenues keep beating estimates, the cuts continue automatically, no future vote required.
What it means for the state’s bottom line
The immediate fiscal impact of the threshold change is modest by design. The roughly 4,000 businesses being exempted are, by definition, the smallest payers in the system, so the revenue forgone is limited even as the number of affected businesses is large. The trigger is the piece with real long-tail consequences. Each individual 0.005-point step is small, but the path from 0.55 percent down to 0.25 percent represents a potential halving of the rate over time, and the BET is a significant revenue source for the state’s general fund and education trust fund.
The timing matters too. New Hampshire’s economy presents a mixed picture, with strong headline numbers masking real strain on workers and businesses navigating higher costs across the board. Lawmakers have leaned on targeted tax relief before, including the business tax credit aimed at childcare capacity that providers greeted with skepticism earlier this session. The threshold approach in HB 155 is more direct: rather than incentivizing behavior, it simply removes the smallest businesses from the tax rolls.
What happens next
The bill now sits with Gov. Ayotte, who has given no indication she opposes it. She has spent the session positioning herself as a pragmatic steward of the state’s finances while supporting relief for small employers, and HB 155 passed with her party’s leadership behind it. If she signs it, the higher filing threshold takes effect for affected businesses, the nursing home rate increase flows through the Medicaid system, and the trigger mechanism waits quietly in statute for the next $100 million revenue surprise.
For small business owners near the threshold, the practical advice is straightforward: businesses with gross receipts or an enterprise value tax base between $297,000 and $400,000 should watch for the governor’s signature and confirm with their tax preparer whether their filing obligation disappears. For the state’s budget writers, the more consequential question arrives later, the first time collections run $100 million hot and the rate begins its automatic descent.
