NH Department of Revenue outlines FY25–FY27 revenue ranges; committee provisionally accepts several agency estimates

The House Ways and Means Committee received an update from the New Hampshire Department of Revenue Administration on state revenue estimates for fiscal year 2025 and projected growth for fiscal years 2026 and 2027, Commissioner Lindsey Stepp told the committee.

Stepp said DRA runs five scenarios to estimate year-end results for each tax type, then selects a “reasonable high and low” from those scenarios rather than simply reporting absolute extremes. "We update them at the end of every month," she said, describing DRA’s approach as a blend of actual year-to-date receipts and assumptions either versus plan or versus the prior year.

Why it matters: the committee uses DRA’s ranges and recommended growth rates as the primary inputs for drafting the House’s revenue resolution and the operating budget. Small shifts in large revenue lines drive the surplus the legislature can spend or commit.

Key takeaways from DRA’s presentation

- Business taxes: DRA reported business taxes are running below plan year-to-date and below the prior year, a trend Stepp attributed in part to businesses “right-sizing” estimated payments after an earlier period of elevated corporate profits. DRA presented a wide FY25 range and recommended applying a 3–8% growth rate for 2026 and 2027 once estimates stabilize.

- Meals and rentals (M&R): DRA said gross M&R receipts for FY25 sit in a narrow range—roughly $475.1 million to $479.1 million—driven mostly by meals (about 80 percent) and rooms (about 18 percent). Net of the municipal revenue transfer and school building aid, DRA showed a FY25 range of roughly $331.9 million to $335.9 million and recommended 2–5% growth for 2026–27.

- Tobacco tax: Stamp sales continue to decline while other tobacco products and some vaping categories have grown. DRA gave a FY25 range of about $182.6 million to $185.3 million and projected continued gradual declines for 2026–27 (e.g., mid-single-digit decreases in some scenarios).

- Interest and dividends tax: Stepp told the committee that the state’s interest-and-dividends tax was repealed effective Jan. 1, 2025. DRA expects collections tied to tax year 2024 to appear in FY25, then small residual collections in FY26 (about $8.7 million) and effectively no revenue from this source in FY27 under current law.

- Meals, communications, real-estate transfer, utility property and other smaller sources: DRA provided ranges and short rationales for each (examples: communications services tax roughly $29.1M–$30.0M for FY25; real estate transfer tax showing recovery with a FY25 gross range that nets to roughly $197.7M–$200.1M after the $5M annual transfer to the affordable housing fund; utility property tax roughly $44.3M–$46.1M).

What DRA emphasized

Stepp cautioned that part of the apparent year-to-date weakness in business tax receipts reflects a resetting of estimated payments and that DRA monitors both estimated payments and later-filed returns to parse behavior changes versus changes in underlying liability. She said DRA will get better clarity after tax returns are filed on March 15 and with extension filings later in the year.

Committee actions taken during the meeting

During the session committee members took informal votes to accept agency-provided estimates for several funds and revenue lines (the committee’s actions will be reflected formally in the draft House Ways and Means revenue resolution). The committee accepted the department-recommended estimates for: Fish and Game unrestricted receipts; Highway Fund receipts presented by DOT; Medicaid recoveries; the statutory SWEPT (statewide education property tax) contribution (set by statute at $363.1 million); Lottery receipts; a grouping labeled “Other” (largely interest and assorted small agency receipts); beer tax; court fines and fees; securities revenue; and the liquor transfer.

Stepp and DRA staff told the committee they will continue to update ranges monthly; the committee instructed staff to incorporate DRA’s FY25 ranges and the recommended growth rates for 2026–27 in the working worksheet that will form the basis of the House revenue resolution.

What the committee asked DRA to follow up on

Members pressed DRA and other agencies on a handful of issues they said require follow-up before the committee finalizes a full revenue resolution: the role of reinsurance and national catastrophe losses on premium tax receipts, the breakdown of estimated payments versus liability for business taxpayers, and historical performance of prior DRA estimates (members asked staff to provide historical estimate-versus-actuals back as far as paperwork allows). DRA agreed to provide more detailed exhibit material and to answer targeted questions in writing and in future sessions.

Outlook

DRA’s approach gives the legislature a range for each revenue source rather than a single point estimate; the committee will use that range to set conservative and alternate budget assumptions as it builds the House operating plan. Final numbers will continue to change as DRA receives monthly receipts and as tax returns and other filings come in over the spring.