The R&D Tax Credit Aspects of New Hampshire



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New-Hampshire
        The New Hampshire economy is a robust one, consistently leading the nation with the lowest poverty rate and top five in lowest unemployment percentage.  NH is among the leader in per capita earnings as well, boasting average earnings per household of over $61,000.  Like any robust economy, much of this success can be attributed to innovation and research and development. The most innovative sectors in the state include manufacturing, packaging, electronic printing, and biomedical research.  Federal and state R&D tax credits are available to stimulate New Hampshire innovation.


The Federal R&D Tax Credit

        Enacted in 1981, the Federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

  • New or improved products, processes, or software
  • Technological in nature
  • Elimination of uncertainty
  • Process of experimentation

        Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 19, 2014, President Obama signed the bill extending the R&D Tax Credit for the 2014 tax year.


The New Hampshire R&D Tax Credit

        Enacted in 2007, the New Hampshire R&D credit allows a credit against business taxes paid to the State of New Hampshire. Business organizations that have expenditures made during the fiscal year for qualified manufacturing research and development may be eligible for the credit. Qualified research must meet the same four criteria as the federal credit.

        The credit may be taken against taxes due on taxable periods ending on and after September 7, 2007. The credit is first applied against the Business Profits Tax and any remainder may be applied against the Business Enterprise Tax. Unused portions of the credit may be carried forward for up to five years.


Smart Manufacturing

        Smart Manufacturing/High Technology (SMHT) is perhaps the largest and most important sector of the state’s economy.  It involves using high-tech equipment to produce electronic components. It includes all of New Hampshire’s 2,100 manufacturing companies, and more than 1,600 high technology companies.  The smart manufacturing concept is comprised of any elements that help manufacturers achieve shorter time-to-market through efficient innovation and production cycles.

        Factories that make advanced goods such as cars, aircraft engines, gas turbines, semiconductors, flat panel displays and medical devices are intensely complex and require highly-skilled employees who can work with sophisticated machines including mechanical and electronic elements as well as software. All these elements are highly integrated within networked facilities designed to maximize production with minimal downtime.  The packaging industry is no exception.  


Packaging

        Paper mills have long been one of the central anchors to the New Hampshire economy.  Although a traditional technology, paper making actually involves significant R&D.  Evolving customer needs and environmental concerns constantly demand innovative solutions.  Many paper products often demand very specific textures and consistencies that must perform well in various environments.  For that reason, engineers and scientists develop a broad array of products for any given setting.  


Monadnock Paper Mills
        Monadnock Paper Mills, Inc. headquartered in Bennington, creates a diverse array of high performance papers for the printing, packaging, and technical specialty markets. 

        The company recently announced the availability of an uncoated product designed specifically for craft beers. The Monadnock Envi® Label is made from 100 percent FSC (Forest Stewardship Council) certified, post-consumer waste fibers. It is designed to withstand the rigors of challenging print images, bottling lines and cold, wet coolers.

        The innovation involved in the Envi product is quite remarkable in that it allows users to enjoy eco-products while retaining the benefits of their traditional counterparts.  Tim Boyd, market segment manager of the mill had this to say about the technology,

         “If you wanted a label to stand up to submersion and not peel, disintegrate or fall off, you had to sacrifice by using mostly virgin pulp. Conversely, if you wanted to be eco-conscious, there was always a compromise in how that material would stand up in the print process or in the cooler. Now, you can have the best of both worlds."

        The Envi labels are particularly popular in the brewing industry.  The product offers American brewers a home-grown source for label stock that upholds brewers’ commitments to quality and sustainability with no compromises in performance or aesthetics.  "Monadnock’s Envi Label is unique because it’s the only product that meets our brewery's commitments to innovative packaging as well as environmental sustainability,” said Jordan Bamforth, creative director at Beau’s All Natural Brewing Company. “It works well on our packaging line and gives us a green alternative to a standard C1S beer label." Some other innovative products by Monadnock are discussed below. 


Duraprint
        The Duraprint 7 is a 5.4 milimeter thick cover material that works well on books, CD/DVD cases, set up boxes, presentation covers and other projects where crack-free repetitive folding is a requirement. The strong yet pliable cover material prints beautifully and holds up to the rigors of demanding folding applications.


Printed Electronics

        Printed electronics is a broad term used for a range of different printer technologies. Generally, it involves the use of 3D printers to create electronic components by stacking layers of electronically conducive ink on top of each other to achieve a desired form.  Constructing electronics on non-conventional substrates, such as paper, clothes and plastics, can benefit a range of technologies, including flexible displays, paper electronics, bio-integrated sensors, wearable clothing and more.  Due to their widespread practical uses many analysts expect this emerging field to grow from its current annual revenue level of $16 billion in 2013 to $76 billion by 2023.   

        New Hampshire is home to many printed electronics companies. Electronic Imaging Materials, Inc. (EIM) in Keene, NH is a bar code media and lab printing systems provider. Founded in 1987, EIM is a privately-held corporation serving customers across the country and around the world.

        Their production facilities make custom and stock thermal, thermal transfer, laser and inkjet labels for clinical, research, electronics, manufacturing, warehousing and other markets with demanding conditions.  EIM produce labels either blank for on-demand printing or preprinted in single or multiple colors. Their engineers and label experts apply extensive technical expertise to solve various application problems. EIM also makes major investments in research and development which includes thorough in-house testing in order to match the best compatibility between labels, printing ribbons and printers, thus assuring the best overall performance of their products.   These are the typical R&D activities that drive the credit. 


Digital Printing

        Digital printing has come a long way since its early beginnings and continues to evolve. R.C. Brayshaw & Company in Warner, NH prints state-of-the-art imaging systems producing vibrant colors and documents or sharp, crisp, black and white materials.   Their newest Digital Press delivers vibrant image quality with excellent sharpness and uniformity. The print system delivers mid-tones, text, neutrals, detailed shadows, bright highlights and excellent photo renderings for specialty photo applications.

        More than ever, customers want to push their creativity to the next level in ways that draw even greater attention to their messages and images.  One particular product, ‘Clear Dry Ink’ opens a new world of creativity and value that brings their prints to life and makes a bold and lasting impression. The ‘Clear Dry Ink’ technology users can benefit from a versatile new tool that draws attention to images and messages.  The creative possibilities are described below:


  • Highlight images for visual variety to make them jump off the page
  • Enhances photos, logos or variable images
  • Applies watermarks to add artistic effects or enhance security
  • Enhances print quality of textured stocks


Dartmouth College

        Much of the innovation in the 21st century is born from university research labs.  A worldwide philosophy has been emerging over the past few decades that academia and industry should partner together in order to bring out the most value from research funding.  Dartmouth regularly ranks among the top 100 institutions in the nation in research funding.  In 2012, the university was awarded $243 million just over the amount awarded to Brown University and just under the amount awarded to Carnegie Mellon.  

        Aside from the federal dollars Dartmouth also raises money from other sources to fund innovation.  In 2014, the college raised $4.3 to build the new Innovation Center and New Venture Incubator on campus that supports the Dartmouth Entrepreneurship Network (DEN).  Drawing on an extensive pool of expertise, the network offers a wide range of services to the Dartmouth community - strategic advice, one-on-one mentoring, educational programs, networking opportunities, infrastructure, and office and lab space. It is all part of the ultimate goal to bring innovation efforts to market.
   

Conclusion

        The New Hampshire economy, like any robust economy, attributes much of this success to innovation and research and development efforts.  The state’s innovative sectors such as manufacturing, paper mills, electronic printing, and biomedical research can use available federal and state R&D tax credits to stimulate and support innovation efforts.


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