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Committee Hears Testimony to Raise Section 179 Cap to $2.5M; DRA Flags Fiscal Timing Questions
Summary
Supporters told the House Ways and Means committee HB 15‑97 would modernize New Hampshire’s tax code by increasing the Section 179 expensing cap from $500,000 to $2.5 million to match federal rules; DRA said its static 2023 estimate showed an $8.3 million revenue decrease but cautioned the impact is largely timing‑sensitive and contingent on taxpayer behavior.
Representative John Genigian introduced HB 15‑97 to raise New Hampshire’s Section 179 expensing cap from $500,000 to $2,500,000 and to make the provision applicable beginning in tax year 2027.
Witnesses from business groups and the Department of Revenue Administration (DRA) described the policy as an alignment with federal tax treatment that would allow qualifying capital expenditures — equipment, machinery and certain improvements to commercial property — to be expensed in the year of purchase rather than depreciated over time. "This change allows businesses to fully deduct the cost of qualifying equipment, capital investments in the year that those purchases were made rather than forcing them to recover these costs slowly over time," said Sarah Scott, deputy state director for Americans for Prosperity, in support of the bill.
Small‑business representatives also testified in favor. John Reynolds, state director for the NFIB, said the federal Section 179 deduction has been an important tool for members and provided an example of a manufacturer able to expand and offer employee retirement benefits after taking the federal deduction.
DRA’s tax policy counsel, Jennifer Ramsey, and Fred Kulbroth, director of audit, highlighted two technical points the committee should consider. First, Ramsey asked for an explicit applicability sentence clarifying that existing provisions apply through tax year 2026 and that the change applies beginning in tax year 2027 to avoid retroactivity or ambiguity. Second, the fiscal estimate in the bill packet is a static analysis: DRA’s representative said the tax year 2023 static analysis produced an $8,300,000 reduction in revenue but emphasized that this number represents the static measure for 2023 and does not account for subsequent timing or behavioral effects. As Ramsey put it, "the 8,300,000 estimate was based on a tax '23 static analysis… That does not take into account what other effects might then flow through the tax return for a given taxpayer." Kulbroth clarified what counts as qualifying capital assets under Section 179 and explained how certain expenditures (roofs, HVAC, fixtures, machinery) may or may not qualify depending on the character of the expense.
Committee members asked whether smaller service firms would benefit and whether inflation and other changes since 2023 would materially alter the fiscal estimate. DRA repeated that the estimate is subject to timing effects — for some taxpayers the deduction is mostly a matter of when revenue is realized rather than a permanent revenue loss, though businesses that cease operations before utilizing future deductions could make the effect permanent.
The hearing record shows robust support from business groups for the policy change but also consistent committee interest in clarifying applicability language and updating the fiscal analysis to reflect more recent tax years and potential behavioral effects. The committee closed the public hearing on HB 15‑97 and moved on to the next item on the agenda.
