The 2021 legislative session wrapped up in New Hampshire at the end of June. It was an interesting year amidst the pandemic, which required largely all remote hearings in the Legislature.
The House and Senate passed H.B.1 and H.B.2 on June 24. These are the two budget bills, and Gov. Chris Sununu signed them into law the following day. The new budget is effective starting July 1, 2021. Below is a summary of the key issues Sheehan Phinney Capitol Group worked on this past session on behalf of PIANH as well as the bills we were monitoring.
Paycheck Protection Program
S.B.3, which clarifies the tax treatment of the federal Paycheck Protection Program loans is a bill that many in the business community have been monitoring. PPP loans/grants are not subject to federal taxes and most states have followed suit and have not made the loan taxable at the state level—that is most states but not New Hampshire.
New Hampshire joins roughly 10 other states that do not automatically conform to the federal tax code, and therefore a federal provision negating the tax on the PPP loans does not automatically apply to businesses in New Hampshire.
This bill, which corrects that issue, has been signed into law.
Under the budget, the business profits tax rate, currently at 7.7%, will fall to 7.6% starting in January 2022. The business enterprise tax rate paid by all businesses will go from 0.6% to 0.55% on wages, interest and dividends a business pays.
Interest and dividends tax
Though the state does not tax individual earned income, it does tax personal income derived from interest and dividends. However, the budget that is now law phases out the state’s interest and dividends tax over the next five years.
Paid family medical leave insurance
The budget bills also adopted a voluntary Granite State Paid Family Leave Plan, which would build on a new benefit program offered to state workers that businesses and individuals can join. Employees who participate will get 60% of their pay for six weeks after a birth or adoption of a child in their first year or to take care of family member with a serious health condition.
The benefit will be run through a private insurer that wins the bid approved by the governor and the New Hampshire Executive Council and will be administered by the Department of Administrative Services.
Unused vacation time
H.B.113, would have required an employer to pay an employee for earned (but unused) vacation time.
This issue has been around for a couple of years, but it has never passed the state Legislature. This bill was not acted on by the House prior to its deadline, and therefore, it was in essence killed for the year.
There were several bills attempting to increase the state’s minimum wage this past session. None of the bills were adopted, so the state’s minimum wage will continue to default to the federal minimum wage, which is $7.25 per hour.
S.B.63, would have limited the liability of business organizations for claims based on exposure to COVID-19. Many of the state’s business organizations teamed up to support this bill. The Senate Commerce Committee voted to re-refer this bill to the committee—or in other words it is going to hold the bill in committee and not move forward with this policy issue until next year.
PIANH joined several other business groups to support passage of this bill and your association will be active on this issue next session.
Unfair insurance practices
H.B.518, which would affect rebates under the law governing unfair insurance practices, declares that a producer may rebate all or a portion of the producer’s commission to employees of the producer for policies of the employee.
This bill passed both the House and the Senate and is now headed to the governor’s desk, He is expected to sign the bill.
S.B.36 would repeal the requirement that those individuals who apply for new automobile insurance policies sign statements of residency.
PIANH Lobbyist Bruce Berke testified in opposition to this bill. During his testimony he indicated that the 18-year-old law had worked to solve an issue that was prevalent at the turn of the century.
Unfortunately, this bill passed both the House and the Senate and is now headed to the governor’s desk for his consideration.