HB 1193-FN - AS INTRODUCED
2024 SESSION
24-2007
12/05
HOUSE BILL 1193-FN
AN ACT relative to the establishment of a child care tax credit program.
SPONSORS: Rep. Sweeney, Rock. 25
COMMITTEE: Ways and Means
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ANALYSIS
This bill provides employers with a child care tax credit against the business profits tax and the business enterprise tax.
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Explanation: Matter added to current law appears in bold italics.
Matter removed from current law appears [in brackets and struckthrough.]
Matter which is either (a) all new or (b) repealed and reenacted appears in regular type.
24-2007
12/05
STATE OF NEW HAMPSHIRE
In the Year of Our Lord Two Thousand Twenty Four
AN ACT relative to the establishment of a child care tax credit program.
Be it Enacted by the Senate and House of Representatives in General Court convened:
1 New Paragraph; Business Profits Tax; Child Care Credit. Amend RSA 77-A:5 by inserting after paragraph XVI the following new paragraph:
XVII. There shall be allowed a child care tax credit applied to an employer’s tax imposed pursuant to this chapter for qualified expenditures made during the taxable year, as follows:
(a) Taxpayer expenditures must be documented and made on behalf of their employee while they were employed during the taxable year.
(b) Taxpayer expenditures must be documented and made directly to a state licensed child care facility or state licensed prekindergarten.
(c) The employee for whom the expenditure is made must be eligible for tuition assistance pursuant to the New Hampshire child care scholarship program; and the employee must earn between 100 percent and 350 percent of the federal poverty guidelines.
(d) The credit shall not exceed $100,000 for any taxpayer in any taxable year.
(e) The aggregate of tax credits issued by the commissioner to all taxpayers claiming the credit shall not exceed $10,000,000 for any fiscal year.
(f) Each credit shall be used to offset the taxpayer's tax liability within the subsequent 5 tax years.
(g) Taxpayers shall apply for this tax credit on forms provided by the commissioner and shall be accompanied by information or records required by the commissioner. Such application shall be filed no later than June 30 following the tax year during which research and development occurred.
(h) A determination on the final amount of the credit awarded by the commissioner to each taxpayer claiming the credit shall be made no later than September 30 of each year.
(i) The commissioner shall adopt rules, pursuant to RSA 541-A, relative to administration of the child care tax credit established under this paragraph, including:
(1) Verification of employment.
(2) Verification of payment by the taxpayer.
(3) Verification that the child care facility and or prekindergarten was duly licensed.
(4) Filing and record keeping requirements.
2 Business Enterprise Tax; Granite State Paid Family Leave Plan Tax Credit; Extensions. Amend RSA 77-E:3-e to read as follows:
77-E:3-e Granite State Paid Family Leave Plan Tax Credit.
There shall be a tax credit allowed against the tax due under this chapter in an amount equal to 50 percent of the premium paid and expenditures for maternity or paternity leave greater than 12 weeks by a sponsoring employer for family and medical leave insurance coverage offered to employees pursuant to RSA 21-I:103 for the taxable period in which the premium is paid.
3 New Section; Business Enterprise Tax; Child Care Tax Credit. Amend RSA 77-E by inserting after section 3-e the following new section:
77-E:3-f Child Care Tax Credit. The child care tax credit as computed in RSA 77-A:5, XVII shall be allowed against the tax due under this chapter.
4 Applicability. This act shall apply to taxable periods ending on or after December 31, 2025.
5 Effective Date. This act shall take effect July 1, 2024.
24-2007
11/29/23
HB 1193-FN- FISCAL NOTE
AS INTRODUCED
AN ACT relative to the establishment of a child care tax credit program.
FISCAL IMPACT: [ X ] State [ ] County [ ] Local [ ] None
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Estimated State Impact - Increase / (Decrease) | ||||||
| FY 2024 | FY 2025 | FY 2026 | FY 2027 | ||
Revenue | $0 | $0 | Indeterminable Decrease | Indeterminable Decrease | ||
Revenue Fund(s) | General Fund and Education Trust Fund
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Expenditures | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None
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Appropriations | $0 | $0 | $0 | $0 | ||
Funding Source(s) | None
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• Does this bill provide sufficient funding to cover estimated expenditures? [X] N/A • Does this bill authorize new positions to implement this bill? [X] No | ||||||
METHODOLOGY:
This bill establishes the Child Care Tax Credit Program that allows employers with qualifying child care expenditures to claim a credit against the Business Profits Tax (BPT), not to exceed $100,000 for any taxpayer in any taxable year and that the aggregate amount of credit in a year shall not exceed $10,000,000. The credit is available to offset the taxpayer's tax liability for the subsequent 5 tax years. The bill allows the child care credit as computed for BPT to be used as a credit against the taxpayer's Business Profits Tax (BET). The Department assumes the Child Care Tax Credit will be claimed against the BPT, BET or apportioned against each tax provided the total credit does not exceed the maximum awarded. The bill also expands the Granite State Paid Family Leave Plan Tax Credit to include expenditures for maternity or paternity leave greater than 12 weeks.
The Department states the new Child Care Tax Credit Program and the expansion of the Granite State Paid Family Leave Plan Tax Credit will result in an indeterminable decrease in General Fund and Education Trust Fund revenue beginning in FY 2026. The Department has no information to determine how many taxpayers would request a credit or the amount of the credit that might be requested for the new Child Care Tax Credit Program or the expanded Granite State Paid Family Leave Plan Tax Credit.
The Department would need to update all necessary tax return forms and electronic management systems to reflect the changes contained in this bill; however, it is not anticipated this will result in any additional administrative costs that could not be absorbed in the Department's operating budget.
The Department does suggest the following:
- language be added to clarify the type of taxpayer expenditures that qualify for the Child Care Tax Credit Program.
- replace "research and development occurred" with "the qualified expenditures paid".
- clarify if the expansion of the Granite State Paid Family Leave Plan Tax Credit is for the full expenditure or only 50% of the expenditures for maternity or paternity leave greater than 12 weeks.
Lastly, there may need to be clarification on the employee eligibility. The bill states an employee must be eligible for tuition assistance pursuant to the New Hampshire child care scholarship program; and the employee must earn between 100 percent and 350 percent of the federal poverty guidelines. To be eligible for the NH child care scholarship program, federal poverty guidelines cannot exceed 250 percent.
AGENCIES CONTACTED:
Department of Revenue Administration