New Hampshire lawmakers say they will now work to repeal a tax on limited liability corporations during upcoming budget negotiations, after failing to include the repeal in a bill regarding reasonable compensation.
Senate leaders said they thought they had reached an agreement with the House to include the repeal with the compensation bill, but House leaders said the issues weren’t related enough to be included together.
The New Hampshire Business Review says that the LLC tax was part of a last-minute budget compromise last year as lawmakers worked to close a loophole in the tax law, but it quickly came under fire from small business advocates.
The tax itself is an extension of a tax on the interest and dividends of other business types. A repeal would make that tax apply only to LLCs with transferable shares.
The recently passed reasonable compensation law limits the deduction that business owners can take for their own compensation at $50,000 per company, a number which many business leaders told the NHBR is too low, especially considering that many small businesses are run by families and the limit is set per company.