More businesses would be exempt from a key state tax under a proposal heading to Ayotte’s desk

The New Hampshire House and Senate stopped shy of cutting a major state business tax outright Thursday, but did pass a plan to lift the tax’s filing threshold, and spend $2.5 million to lift Medicaid provider rates at state nursing homes.

“What you have before you is a bill that will protect our nursing homes, and protect our small businesses,” said Republican Sen. Tim Lang of Sanbornton.

Under the bill, the threshold on the state business and enterprise tax would be lifted from $297,000 to $400,000, a move GOP leaders expect will exempt about 4,000 small businesses from having to pay the tax.

The bill’s inclusion of money to boost provider rates for nursing homes was a policy the Senate prioritized, and its inclusion in the bill earned the plan some Democratic support. But that evaporated when Republicans in the House pushed to add a trigger to the bill to automatically reduce the rate of the tax when collections from the levy far exceeded estimates.

“The rate cuts are reckless and irresponsible and would potentially cost hundreds of millions of dollars in the future,” said Sen. Cindy Rosenwald of Nashua.

Under the plan, the tax rate, which now stands at 0.55%, would automatically drop by .005% anytime collections on the tax surpassed estimates by $100 million until the rate of the levy reached 0.25%, equivalent to the rate when the tax was created in 1993. Any reduction would also require the state’s Rainy Day Fund to hold a strong balance.

Cutting business taxes has been a focus for GOP leaders in Concord for years, and they’ve dropped the rate of the Business Enterprise Tax four times since 2016.