During 2017, an update to the New Hampshire Education Tax Credit (HB 386) was passed expanding the application period for the credit. As background, in 2012 the New Hampshire’s legislature enacted the Education Tax Credit Program (ETC Program). The ETC Program was challenged in New Hampshire’s judicial system and in 2014 the State Supreme Court allowed the ETC Program to remain in place.
What is it
The ETC Program allows business owners operating in New Hampshire to contribute money in a tax-advantaged manner to an eligible educational scholarship organization such as the Children’s Scholarship Fund New Hampshire.
The Children’s Scholarship Fund (CSF) is a 501(c)3 non-profit organization that provides educational information and scholarships to New Hampshire students who are struggling in their current school. The CSF allows disadvantaged New Hampshire students to attend a school that is a better fit for them and their learning needs. Through CSF and the ETC Program, businesses have provided cumulative scholarships since 2013 of just under $1.1 million dollars and are currently supporting 260 students in the 2017-2018 fiscal year through this program.
How it works
The ETC Program provides a tax credit to businesses that make an eligible contribution(s) to an approved scholarship organization. The credit is claimed against either the business enterprise tax or the business profits tax or apportioned against both for 85% of the contribution! The contribution is also deductible for federal tax purposes. The Credit Program can maximize a business’s philanthropic dollars.
Proper tax planning and an understanding the mechanics and timing of the Education Tax Credit Program are vital. Currently, a business must apply to the NH Department of Revenue Administration between January 1st and November 15th for approval to make a contribution for that year. Prior to the 2017 law change, applications were due by June 15th of each year, thus the opportunity to apply for the credit has been greatly expanded. Additionally, a business must make the contribution to an approved scholarship organization within 60 days of being approved by the DRA or no later than December 15th of the year. Previously, the due date for the contributions were July 15th of the year. Applications made in late October or prior to November 15th must still be approved and paid before December 15th of the year. Lastly, the ETC Program has a cap for total allowed contributions and the maximum contribution allowed by any one business.
The 2018 Education Tax Credits for business are available starting January 1, 2018. If you have questions regarding the ETC Program and tax benefits for your business, please contact a member of our team.