UPDATED: Senate passes research and development tax credit hike
CONCORD - Doubling the state research and development tax credit for businesses easily passed the Senate Wednesday on a 23-0 vote.
Senate Bill 1 is a priority for Senate Republicans and Democrats and would double the tax credits available for research and development from $1 million yearly to $2 million and would also make the credits permanent.
The prime sponsor of SB 1, Sen. Bob Odell, R-Lempster, said the bill sends a strong signal that government supports businesses in New Hampshire that have invested in the state and encourages others to come set up shop here.
He said the increase in credits would help create jobs and help state economic development agents attract new businesses.
A similar bill passed the Senate on a 24-0 vote last year, but was caught up in a battle between the House and Senate at the end of the session and died.
This year, supporters believe the increase in credits will become law with support from Gov. Maggie Hassan and many key House members.
After the vote, Hassan said the bill shows New Hampshire welcomes innovation, encourages more businesses to invest in developing new technologies and making it permanent adds predictability for businesses.
"This measure is a significant step forward in our efforts to attract new businesses, support our existing companies, and keep New Hampshire a leader in the innovation economy," Hassan said.
Senate Majority Leader Jeb Bradley, R-Wolfeboro, said the bill is important for New Hampshire manufacturers.
"Passage of SB 1 represents yet another selling point for high-tech businesses considering relocating to the Granite State, and is a cornerstone of the Senate Republican agenda to lower taxes, reduce regulations and improve the environment for job creation here in New Hampshire," Bradley said.
Democrats also praised the bill, saying it shows their continued focus on creating jobs and spurring the economy.
"I believe creating a business friendly climate will send a message to companies currently in New Hampshire and companies around the world that New Hampshire is open for business and that we will work tirelessly to support your business so it can grow," said Sen. Andrew Hosmer, D-Laconia.
"That's how we create good jobs right here."
He noted that a company in his district, Freudenberg North American, invests about $7 million in research and development here.
"It's vitally important for companies like Freudenberg that we show them we are serious about supporting them by creating the right climate for our businesses - and Senate Bill 1 does just that," Hosmer said.
Research and development tax credits were reinstated in 2007, but have remained modest at $1 million.
The credits are capped at $50,000 a year per company and may be applied to a company's tax liability for either the business profits tax or business enterprise tax.
However, because more companies apply for the credit than is available, most companies receive only about a quarter of their request.
By increasing the credits to $2 million a year, lawmakers believe companies will be able to receive greater credits, although last year companies applied for more than $4 million in credit and received about 24 percent of what they requested.
Business organizations and representatives of individual businesses turned out to support the increase at a public hearing last month. But larger companies suggested the tax credit be more proportional to the amount of money a company spends on research and development.
The bill now goes to the House for action.