Contributed by: Angela Zakon, CPA – Supervisor in collaboration with the New Hampshire Community Development Finance Authority
Today’s current (and often uncertain) times have prompted so many of us here in New Hampshire to adjust our business practices and seek out ways to do more with less. One way to help minimize possible operations gaps is to understand some of the relevant tax credit programs available to New Hampshire businesses. If your business has an NH tax liability, you can leverage your charitable giving by purchasing tax credits through the New Hampshire CDFA’s Tax Credit Program.
Important Details of the CDFA Tax Credit Program
The CDFA awards approximately $5 million in tax credits through a competitive grant process to NH organizations engaged in community economic development initiatives, such as building a new food pantry, renovating a historic theater, or building workforce housing. Projects supported by tax credits have significant impacts on their communities as highlighted in this brief video about how Vaughan Community Services in North Conway is using tax credits to support the renovation of its child care facility and construction of a new food pantry. When a tax credit is purchased, the nonprofit receives a donation, and the purchasing business gets a tax credit worth 75% of the donation. For example, if a business purchases $10,000 in tax credits, they will get a tax credit of $7,500.
In this example, the additional out of pocket cost to the business to make a $10,000 donation is only $2,500 since they would be paying the $7,500 in taxes without the tax credit. Depending on the business’s exact situation the additional out of pocket expense might be even less. The tax credits can be used to offset various New Hampshire taxes, including:
- NH Business Profits Tax
- Business Enterprise Tax
- Insurance Premium Tax
The purchasing companies not only reduce their tax liability but also get to direct where some of their tax dollars go by donating to a project that aligns with their values, community needs and philanthropic interests. Additionally, the business has the peace of mind that all the approved projects have been vetted by CDFA and demonstrate a high degree of community support, build partnerships, and leverage other resources in their communities.
For more details about this tax program, please visit the CDFA website.
Contact Leone, McDonnell & Roberts Today
If you want to learn how the CDFA tax credit program could help your business support your community, contact Leone, McDonnell & Roberts today. Our team of accountants can help you understand the exact impact this program may have on your business.