Bill seeks big hike in BPT equipment deduction

Larger businesses in New Hampshire could get a big break in their business profits tax bill if a measure passed by the Senate Ways and Means committee becomes law.Senate Bill 155 would allow businesses to increase their maximum annual deduction on equipment from the business profits tax (the Section 179 deduction under federal tax law) to the federal limit of $500,000. The state limit is currently $20,000.The state now conforms to the IRS code as it was set in 2000. But under the amended version, the bill won’t go into effect until 2014. By that time, the limits may go up again on the federal level. (The limit recently were increased from $250,000 to the current $500,000.)Still, said the committee’s chairman, Sen. Bob Odell, R-Lempster, passing the bill would “send a message” that businesses will be able to make those deductions in the future, and accountants could use the same standard for both state and federal returns.But the cost to state revenues still must be determined, and if the cost is too high, the full Senate could kill it the bill.On the national level, the ability of companies to take advantage of the accelerated depreciation is one of the reasons that they have been able to avoid a significant tax burden. But in a state like New Hampshire, most businesses simply don’t buy enough equipment to deduct more than $20,000 in the first year in the first place. Some do, however, and until now, the state Department of Revenue Administration has not kept track of how many would be able to take advantage.”We will start collecting in 2012. We will have the information in the data system at least one year,” said Melinda Ellen Cyr, a tax policy analyst for the agency.Cyr said the Department is neutral on the law. It just wants to be able to tell lawmakers what the impact of it will be. — BOB SANDERS/NEW HAMPSHIRE BUSINESS REVIEW