New Hampshire has no income tax on wages or salaries

New Hampshire does not tax the money you earn from a job. There is no state income tax on wages, salaries, or self-employment income. This is one of the few states in the country with this policy, and it shapes how the state funds schools, roads, and services instead.

However, New Hampshire does tax certain types of investment income. The state taxes interest and dividends at a flat rate of 5 percent. This applies to earnings from savings accounts, bonds, stocks, and similar investments—but not to capital gains (the profit when you sell an investment for more than you paid).

Key Takeaways

  • New Hampshire does not tax income from wages, salaries, or self-employment work.
  • The state does tax interest and dividend income at 5 percent, though certain accounts like retirement funds may be exempt.
  • New Hampshire funds state services through sales tax, property tax, and business taxes instead of income tax.
  • If you moved to New Hampshire from another state, you may still owe taxes to your former state on income earned while you lived there.

What types of income are taxed in New Hampshire

Interest income and dividend income are the main types of income New Hampshire taxes. Interest comes from savings accounts, money market accounts, certificates of deposit, and bonds. Dividends are payments companies make to shareholders. Both are taxed at a flat rate of 5 percent.

Some income is exempt from this tax. Retirement account distributions—money you withdraw from a traditional IRA, 401(k), or similar plan—are not subject to New Hampshire's interest and dividend tax. Social Security benefits are also exempt. If you receive income from a pension or annuity, that income is not taxed by New Hampshire either.

Capital gains—the profit you make when you sell a stock, mutual fund, or other investment for more than you paid—are not taxed by New Hampshire. This is different from the interest and dividend tax, which applies to ongoing earnings from investments you hold.

How New Hampshire funds state services without income tax

New Hampshire relies on sales tax, property tax, and business taxes to fund schools, roads, and state programs. The state sales tax is 9 percent on most goods, though some items like groceries and clothing are exempt or taxed at a lower rate. Property tax is assessed by towns and cities based on the value of real estate.

The state also taxes business profits, meals and rooms (a 9 percent tax on hotel stays and restaurant meals), and utilities. These sources together replace the revenue that other states collect through income tax. This structure means New Hampshire residents who earn wages pay no state income tax, but may pay more in property tax or sales tax than residents of other states.

What to do if you moved to New Hampshire from another state

If you moved to New Hampshire during the year, you may still owe taxes to your former state on income you earned while living there. Most states tax income based on where you lived when you earned it, not where you live now. You will need to file a part-year resident return in your old state for the months you lived there.

Contact your former state's tax department to find out whether you need to file. Many states have reciprocal agreements with neighboring states, which can affect how much you owe. If you worked remotely for a company in another state while living in New Hampshire, the rules depend on where your employer is located and where you performed the work—this is an area where state rules vary significantly.

Self-employment and business income in New Hampshire

If you are self-employed or own a business, you do not pay New Hampshire state income tax on your business profits. However, you still owe federal self-employment tax and federal income tax. You may also owe New Hampshire's business profits tax if your business is structured as a corporation or partnership.

Sole proprietors (people who own a business by themselves and file under their own name) do not owe New Hampshire business profits tax. If you operate as an LLC, S-corporation, or C-corporation, you may owe this tax depending on your structure. The business profits tax rate varies, so check with the New Hampshire Department of Revenue Administration if you are unsure whether your business owes it.

Filing taxes as a New Hampshire resident

Even though New Hampshire has no income tax on wages, you still need to file a federal tax return if your income exceeds the federal threshold. The threshold depends on your age, filing status, and type of income. Most working adults will owe federal taxes and should file.

If you have interest or dividend income, you will need to report it to New Hampshire and pay the 5 percent tax. You can file this return online through the New Hampshire Department of Revenue Administration website, or by mail using Form DP-10. The important date is the same as the federal important date: April 15 (or the next business day if April 15 falls on a weekend).

Keep records of all interest and dividend income you received during the year. Your bank and investment companies will send you forms (1099-INT for interest, 1099-DIV for dividends) that show how much you earned. Use these forms to complete your New Hampshire return accurately.

Frequently Asked Questions

Do I have to file a New Hampshire tax return if I only have wage income?

No. If your only income is wages or salary, you do not need to file a state return in New Hampshire. You still need to file a federal return if your income is above the federal threshold, but New Hampshire will not require a state return.

What happens if I have both wage income and dividend income?

You do not owe New Hampshire tax on the wages, but you do owe tax on the dividends at 5 percent. You will need to file a New Hampshire return reporting the dividend income, even if you would not otherwise file.

Are retirement account withdrawals taxed in New Hampshire?

No. Distributions from IRAs, 401(k)s, pensions, and annuities are not subject to New Hampshire's interest and dividend tax. Social Security benefits are also exempt from taxation in New Hampshire.

If I work remotely for a company in Massachusetts, do I owe Massachusetts income tax?

It depends on where you live and where your employer is located. If you live in New Hampshire and work remotely for a Massachusetts company, Massachusetts may still claim you owe tax on that income. Contact both states' tax departments or speak with a tax professional, because the rules vary by situation and change periodically.

Do I need to pay estimated taxes in New Hampshire?

If you have self-employment income or investment income, you may need to pay federal estimated taxes quarterly. New Hampshire does not require estimated tax payments for state purposes since there is no income tax on wages. Check with the IRS about federal requirements based on your specific situation.