New Hampshire Has No State Income Tax on Wages

New Hampshire does not tax wages, salaries, or self-employment income. If you work and live in New Hampshire, you keep all of your paycheck — the state does not withhold income tax the way most other states do. This applies whether you work for an employer, run your own business, or both.

This is one of nine states in the United States with no broad income tax on earned income. The other eight are Alaska, Florida, Nevada, South Dakota, Tennessee, Texas, Washington, and Wyoming. If you move to New Hampshire from a state that has income tax, or if you work across state lines, understanding how this works matters for your tax filing and withholding.

Key Takeaways

  • New Hampshire does not tax wages, salaries, or self-employment income at the state level.
  • New Hampshire does tax interest and dividend income at 5 percent, though certain accounts and amounts are exempt.
  • If you work in another state but live in New Hampshire, you may owe tax to that state on the income you earned there.
  • You still file a federal income tax return each year; the absence of state income tax does not change your federal obligations.
  • New Hampshire funds state services through property tax, sales tax, and business taxes rather than income tax.

What Income New Hampshire Does Tax

Although New Hampshire does not tax wages, it does tax interest and dividend income at a rate of 5 percent. This applies to interest from savings accounts, bonds, and certificates of deposit, as well as dividends from stocks and mutual funds. The tax is called the Interest and Dividends Tax.

However, several types of income and accounts are exempt. Interest and dividends from retirement accounts — including traditional IRAs, Roth IRAs, 401(k)s, and SEP-IRAs — are not taxed. Distributions from these accounts are also exempt. Additionally, if your total interest and dividend income for the year is below a certain threshold (currently $2,400 for single filers and $3,600 for married filers filing jointly), you do not owe the tax. Social Security income is also exempt from this tax.

If you receive interest or dividends above the threshold, you report them on the New Hampshire Form LS (Interest and Dividends Tax Return) when you file your state return. Many people with modest savings or retirement accounts never reach the threshold and never file this form.

How Working Across State Lines Affects Your Taxes

If you live in New Hampshire but work in another state, that state may require you to pay income tax on the wages you earned there. For example, if you live in New Hampshire and work in Massachusetts, you owe Massachusetts income tax on your Massachusetts wages. Massachusetts does not give you a break because you live in a no-income-tax state.

Most states that border New Hampshire — including Massachusetts, Vermont, and Maine — have reciprocal tax agreements. These agreements typically mean you pay tax to the state where you work, not the state where you live. You may be able to claim a credit on your New Hampshire return for taxes paid to another state, though New Hampshire's credit is limited because the state itself does not tax wages.

If you work remotely for a company in another state but live in New Hampshire, the tax treatment depends on where your employer is located and where you actually perform the work. Some states tax remote workers based on where the company is; others base it on where the work happens. You should check with the state where your employer is located or where you work to understand your obligations.

Federal Income Tax Still Applies

The absence of New Hampshire state income tax does not change your federal income tax obligations. You still file a federal return with the IRS each year if your income exceeds the filing threshold for your age and filing status. Federal tax rates and rules explore the same way they do to residents of any other state.

When you receive a W-2 from your employer, it shows federal tax withheld but no New Hampshire state tax withheld (unless you also worked in another state). When you file your federal return, you report all income the same way — New Hampshire residents and residents of high-tax states follow identical federal rules.

How New Hampshire Funds State Services Without Income Tax

New Hampshire raises revenue for state services through other taxes. The state has a property tax, which is among the highest in the nation on a per-capita basis. New Hampshire also collects a sales tax of 9 percent (as of 2024, though this varies slightly by category — groceries are taxed at a lower rate). The state also taxes businesses, including a Business Profits Tax and a Business Enterprise Tax.

This tax structure means New Hampshire residents often pay more in property tax than residents of states with income tax. The trade-off is visible on your paycheck — you take home more of your wages — but it appears in your property tax bill and at the register. Understanding this balance matters if you are considering moving to New Hampshire or comparing your overall tax burden.

What to Do If You Receive Interest or Dividend Income

If you receive interest or dividend income above the threshold, you need to file the New Hampshire Form LS with the state. You can obtain this form from the New Hampshire Department of Revenue Administration website. The form asks for your name, Social Security number, filing status, and the total amount of interest and dividends you received during the year.

Your bank, brokerage, or investment company will send you a 1099-INT (for interest) or 1099-DIV (for dividends) showing the income you received. Use these forms to complete the LS. If your total is below the threshold, you do not file the form, but you should keep your 1099s for your records in case the state requests them.

If you file your federal return electronically, you can often file your New Hampshire return at the same time through tax software that supports multiple states. If you file by mail, send the Form LS to the address listed on the form instructions.

Moving to or From New Hampshire

If you move to New Hampshire from a state with income tax, your first paycheck will likely show no state tax withheld. This is normal and correct — you do not owe New Hampshire income tax on wages. However, you may still owe tax to your previous state for income earned there before you moved, depending on that state's rules and when you moved during the year.

If you move away from New Hampshire to a state with income tax, your new employer will begin withholding state tax according to your new state's rules. You may need to file a final return with New Hampshire for the portion of the year you lived there, though this depends on your income level and the state's requirements.

Frequently Asked Questions

Do I have to file a New Hampshire tax return if I have no income tax?

If you have no interest or dividend income above the threshold, you do not file a New Hampshire return. However, if you received interest or dividends above the threshold (currently $2,400 for single filers), you file Form LS. You always file a federal return if your income exceeds the federal threshold, regardless of New Hampshire's rules.

What if I work in New Hampshire but live in another state?

You do not owe New Hampshire income tax on your wages because New Hampshire does not tax wages. However, your home state may tax your income. Check with your state of residence to understand your obligations. Some states have reciprocal agreements that determine which state taxes your wages.

Are retirement account withdrawals taxed in New Hampshire?

Withdrawals from traditional IRAs, 401(k)s, and similar retirement accounts are exempt from New Hampshire's Interest and Dividends Tax. However, you still owe federal income tax on most retirement account withdrawals. The state exemption applies only to the state tax, not the federal tax.

Is Social Security income taxed in New Hampshire?

No. New Hampshire does not tax Social Security benefits. This applies whether you receive Social Security as a retiree, survivor, or for disability. You still report Social Security on your federal return, and it may be taxable at the federal level depending on your total income.

What if I own a business in New Hampshire?

New Hampshire does not tax business income as personal income, but the state does tax business profits through the Business Profits Tax and Business Enterprise Tax. These are separate from personal income tax. Consult a tax professional or the New Hampshire Department of Revenue Administration for details on your specific business structure.