Are R&D Tax Credits Available in New Hampshire?

The state of New Hampshire provides the Research and Development (R&D) Tax Credit which offers taxpayers a permanent research and development credit against business profits and business enterprise taxes. The credit is for qualified manufacturing research and development expenditures made or incurred within New Hampshire during the fiscal year. The expenditures are defined as wages provided that the wages qualify for the federal credit under IRC §41. Below are some R&D Tax Credit details for the state of New Hampshire:

  • The credit is first applied against the business profits tax (BPT), and any remaining amount may be applied against the business enterprise tax (BET).
  • The credit amount is the lesser of 10% of the business organization's qualified manufacturing research and development expenditures or $50,000.
  • In the event that the aggregate amount of credit applied for, in any given fiscal year, exceeds $7 million, all credits for that year will be reduced proportionately.
  • The credit application (Form DP165) must be submitted to NH DRA and postmarked no later than June 30 following the tax year during which the research and development occurred. The application should be submitted along with Federal Form 6765.
  • The unused portion of the credit may be carried forward for 5 years.
  • Unitary businesses and enterprises consisting of more than one taxpayer are considered one taxpayer for purposes of claiming the credit.


New Hampshire R&D Tax Credit Case Study

A Concord company designs and manufactures high-tech components for the electronics industry. The company claims R&D credits each year for the development activities of its engineers. This project involved a multi-year study.

The Company qualified for the federal R&D Tax Credits of $271,832 and an additional $50,000 in New Hampshire state R&D Tax Credits.

Total QREs
Total QREs
Year 3
Year 2
Year 1
Total $1,200,000 $271,832 $1,000,000 $50,000

You can read more about this New Hampshire tax credit case study here.

Four-Part Test

Qualified research activities are defined by the four-part test outlined below

Technological in Nature
Activities must fundamentally rely on the principles of physical or biological science, engineering, or computer science.

Permitted Purpose
Activities must be performed in an attempt to improve the functionality, performance, reliability, or quality of a new or existing business component.

Eliminate Uncertainty
Activities intended to discover information that could eliminate technical uncertainty concerning the development or improvement of a product.

All activities must include a process of experimentation including testing, modeling, simulating, and systematic trial and error.