BET income is the enterprise value tax base used to calculate New Hampshire’s Business Enterprise Tax. It is the sum of three things a business pays during its taxable period: compensation, interest, and dividends. New Hampshire applies a rate of 0.55 percent to that total, and a business must file a BET return if either its gross receipts or its enterprise value tax base exceeds $298,000.1NH Department of Revenue Administration. Business Taxes The BET is one of New Hampshire’s main business-revenue tools, since the state has no general sales tax and no broad-based wage income tax.2Tax Foundation. New Hampshire Tax Rates and Rankings
What makes BET income different from a profits figure is that it measures economic activity, not earnings. A company that broke even, or lost money, can still owe BET if it paid wages, carried debt, or distributed money to owners.3NH Department of Revenue Administration. Business Enterprise Tax
The Three Components of BET Income
Compensation
Compensation is the largest piece for most businesses. It covers wages, salaries, fees, bonuses, and commissions paid to employees, officers, and directors, along with other payments subject to federal income tax withholding under IRC Section 3401. Federally exempt categories such as active-duty military pay and certain agricultural labor payments are excluded, and employee tips reported to the employer are also left out.4New Hampshire General Court. New Hampshire Revised Statutes 77-E:1 – Definitions
Self-employment earnings subject to federal self-employment tax count as compensation when the owner has not already deducted them under the Business Profits Tax. If a business uses a leasing company for staffing, the entity that issues the W-2 puts that payroll into its own BET base.3NH Department of Revenue Administration. Business Enterprise Tax
Interest
Interest paid or accrued on any business debt goes into the base. That includes interest on commercial loans, lines of credit, and mortgages on business property. Banks include interest paid to depositors.3NH Department of Revenue Administration. Business Enterprise Tax Where the lender sits, inside or outside New Hampshire, does not matter.
Dividends
The dividend component is broader than most owners expect. Beyond ordinary cash dividends, it captures property transferred from the business to an owner out of accumulated profits, personal expenses the business pays on an owner’s behalf (unless those are reported as compensation on the owner’s federal return), and forgiveness of an owner’s debt to the business. Automatic reinvestment of distributions into additional company stock also counts, and imputed interest on below-market loans under IRC Section 7872 is treated as a dividend.5Cornell Law School. NH Admin Code Rev 2402.03 – Dividend Element
Distributions are presumed to come first from current-year profits, then accumulated profits, and only then from capital. For S corporations, distributions from the accumulated adjustments account and from pre-election earnings and profits both count. One carve-out matters: distributions made in a complete liquidation or full redemption of an owner’s interest are not treated as dividends for BET purposes.5Cornell Law School. NH Admin Code Rev 2402.03 – Dividend Element Intercompany dividends between affiliates and their parent can be deducted by both entities.3NH Department of Revenue Administration. Business Enterprise Tax
Adjustments Before You Get to the Taxable Base
Once the three components are totaled, special adjustments can be applied before you arrive at the taxable enterprise value tax base. The most useful one for small operators helps sole proprietors and other self-employed filers: self-employment compensation that is genuinely retained in the business, rather than distributed or consumed, can be deducted. The business has to be able to prove the amount was actually kept for business use.6New Hampshire General Court. New Hampshire Revised Statutes 77-E:3 – Special Adjustments
A business operating in New Hampshire and at least one other state does not pay BET on the entire base. RSA 77-E:4 requires multi-state businesses to apportion the enterprise value tax base so that only a fair and equitable share is allocated to New Hampshire, using the framework other states apply to similar business activity taxes.7New Hampshire General Court. New Hampshire Revised Statutes 77-E:4 – Apportionment
The Rate and a Simple Example
The current BET rate is 0.55 percent of the taxable enterprise value tax base, effective for all taxable periods ending on or after December 31, 2022.8New Hampshire General Court. New Hampshire Revised Statutes 77-E:2 – Imposition of Tax A business with a $500,000 enterprise value tax base owes $2,750 in BET before any credits. The rate previously stood at 0.6 percent for periods ending on or after December 31, 2019, so older reference material may show that higher figure.
Who Has BET Income to Worry About
The BET reaches nearly every form of business organization operating in New Hampshire: corporations, partnerships, limited liability companies, sole proprietorships, associations, trusts, foundations, and real estate trusts.4New Hampshire General Court. New Hampshire Revised Statutes 77-E:1 – Definitions For taxable periods beginning on or after January 1, 2025, you must file a BET return if gross receipts from all activities exceed $298,000, or if the enterprise value tax base exceeds $298,000. The threshold is reset every two years.1NH Department of Revenue Administration. Business Taxes
Organizations exempt from federal income tax under IRC Section 501(c)(3) are generally outside the BET. The narrow exception is unrelated business income as defined by IRC Section 513: in that case the organization files a BET return covering only the compensation and interest attributable to the unrelated activities, not its exempt operations.9Cornell Law School. NH Admin Code Rev 2402.05 – Business Enterprises Exempt From Tax Under IRC Section 501(c)(3) With Unrelated Business Income
How BET Interacts with the Business Profits Tax
BET paid can be applied as a dollar-for-dollar credit against Business Profits Tax liability, which changes what the BET actually costs a business. If the BPT bill is smaller than the BET payment, the unused credit is not lost. For credits attributable to taxable periods ending on or after December 31, 2014, the unused portion carries forward for up to ten years against future BPT liability.1NH Department of Revenue Administration. Business Taxes
The practical effect is that many smaller businesses with modest profits pay only the BET, with the full amount reducing their BPT to zero. Businesses with higher profits still owe BPT on top, but the credit reduces the combined bill. A BET filing that ignores the credit leaves money with the state that the statute allows the business to keep.