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New law lets New Hampshire PEO clients claim tax credit

July 10, 2015

Small business clients of professional employer organizations in New Hampshire will be able to take advantage of the state’s business enterprise tax credits after Governor Maggie Hassan this week signed Senate Bill 211 into law.

Under current law, all businesses in New Hampshire must pay the BET, which is calculated as a percentage of employee payroll. Businesses can then apply the amount paid as a tax credit against business profits, according to the National Association of Professional Employer Organizations. Since PEOs in New Hampshire are considered the employer of record, only they have been able to take the credit against profits, while the companies they serve have been unable to do so. 

This new law allows an employee leasing company and a client company to elect to make the client company solely responsible for paying business enterprise taxes concerning its leased employees and be eligible for credits against such taxes. It applies to taxable periods beginning on or after Jan. 1, 2016.

“This legislation is a tremendous victory for New Hampshire businesses because it allows them to reap both the benefits of working with a PEO and the benefits of the state’s BET credit,” said NAPEO President and CEO Pat Cleary.

“From the beginning, this has been a fairness issue,” said Bob Burbidge, chairman of NAPEO's New England Leadership Council and CEO of Genesis HR Solutions. “The tax credits were intended to help businesses in New Hampshire grow and thrive, and those growing businesses shouldn’t be penalized for partnering with a PEO for payroll, benefits and other HR services. We’re thrilled that this wrong has been righted.”

PEOs work with more than 250 small and mid-sized businesses in the state, according to NAPEO.