Amnesty Tax Boost Not Unique To New Hampshire

By GARRY RAYNO, InDepth NH

CONCORD, NH — New Hampshire is not alone in using a tax amnesty program to help shore up revenues to balance the current biennial budget.

A new analysis by the Pew Charitable Trusts notes that some states are turning to tax amnesty programs due to the increasing fiscal pressure states face much like the Granite State.

New Hampshire’s tax amnesty program was projected to produce about $5 million in revenue for the biennial budget, but instead the program generated $103.8 million, more than 90 percent from delinquent business taxpayers.

At the time, budget writers in the Senate were seeking additional revenues to add programs Gov. Kelly Ayotte included in her budget that House budget writers removed or reduced.

While the Senate did not embrace the rosier revenue estimates in the governor’s budget, they presented estimates more expansive than the House’s and the amnesty program was another attempt to bring in yet more money to cover government services.

Unlike the other two states — Indiana and Illinois — offering amnesty programs this year, New Hampshire waived penalty fees, and offered a 50 percent discount on interest owed on their liabilities.

The two midwestern states set aside both penalty fees and owed interest in their amnesty programs to encourage delinquent taxpayers, but Indiana’s currently open program limits taxes owed prior to Jan. 1, 2024, while Illinois offered amnesty for taxes owed between June 30, 2018 and July 1, 2024.

New Hampshire’s program ran for three months between Dec. 1, 2025 and Feb. 28, 2026, while Illinois’s program ran between Oct. 1 to Nov. 17, 2025.

Indiana’s program began July 1 and ends Sept. 9.

“Although states have offered well over 100 other such reprieves since the 1980s, these latest three all arrived in less than a year—a sign of the increasing fiscal pressure states face,” said Josh Goodman, Senior Officer, State Fiscal Policy for Pew.

But he notes, budget experts and watchdogs do not generally recommend this approach as they often give states a short-term revenue boost at the expense of reduced revenue and diminished tax filing and compliance over the long term.

Goodman said the risks are compounded when states offer repeated amnesty programs.

New Hampshire’s last amnesty program was in 2016 and it produced $19 million in revenue for the state.

State governments do not have the resources to audit more than a small fraction of taxpayers so they are dependent on individuals and businesses to voluntarily meet their tax obligations, but when taxpayers expect an amnesty program, they are less likely to pay in full or on time, Goodman writes.“Given New Hampshire’s history of a significant amount of time between amnesty programs, I do not think that the program would discourage voluntary compliance and certainly there will be additional revenue from getting new taxpayers filing regularly,” Lindsey M. Stepp, commissioner of the state’s Department of Revenue Administration, said in an email to Pew.

Critics also say the amnesty programs often collect money states would eventually receive from normal enforcement methods as well as the interest and penalties.

“For example, of the $103.8 million New Hampshire’s amnesty garnered,$79.5 million came from existing audit cases,” Goodman said. “For states considering amnesties, the question is whether they can design their policies to reduce these risks or even spur amnesty beneficiaries to become regular payers.”

Most of the money collected in New Hampshire’s program came from business taxes, the Business Profits Tax and the Business Enterprise Tax.

According to figures released by the Department of Revenue Administration, $96.7 million of the money generated came from business taxes, $4.4 million from the Interest and Dividends Tax, $1 million from Meals and Rentals Tax, $1 million from Communication Services Tax and $700,000 from the Tobacco Tax.

At the time the department noted the program closed a significant number of audit and collection cases and also brought new filers onto the tax rolls.

Audit — $79.5 million collected from 692 returns with 94.6 percent from business taxes, 2.7 percent from interest and dividends, 1.2 percent from communications, and 1.5 percent from meals and rooms and the Tobacco Tax.

Collections — $11 million collected from 1,780 returns with 87.3 percent from business taxes, 5.8 percent from interest and dividends, 6 percent from meals and rooms, .9 percent from communications and the Tobacco Tax

New Filers – $3.4 million collected from 850 returns with 91.7 percent from business taxes, 5.8 percent from interest and dividends, and 2.5 percent from meals and rooms.

The Interest and Dividends Tax, the only state levy that taxes individuals’ wealth, was repealed Dec. 31, 2024.

In the 1980s amnesty programs were also prevalent but paired with stiffer penalties and greater enforcement efforts so the message was pay up now or it will be worse in the future.

But in the first two decades of this century, state’s were more interested in a quick influx of additional money to deal with severe budget challenges such as the dot-com bust and the Great Recession, said Justin Ross, public affairs and public policy professor at Indiana University.

Using one-time money to pay for on-going operating costs allowed states to balance their budgets in the near term but moved hard decisions into the future, said Goodman.“They’re just a gimmick,” James Alm, professor emeritus of economics at Tulane University, told Pew. “They don’t generate that much revenue and the long-run effects can be potentially significant and negative.”

The use of amnesty programs slowed but recently Connecticut and Nevada offered one-time programs in 2021 and Massachusetts in 2024.

“Despite the criticisms, the enduring use of tax amnesties shows that the bargain they offer—a revenue boost without the need to raise taxes—appeals to state leaders trying to solve budget challenges,” Goodman writes. “As with many budget balancing strategies, the key for states is to try to limit long-term fiscal harm, even when seeking short-term relief.”

Garry Rayno may be reached at garry.rayno@yahoo.com.

This story was originally published by InDepth NH.