New Hampshire does not have a state income tax on wages

New Hampshire is one of nine states with no income tax on wages and salaries. If you work and earn a paycheck, you do not owe New Hampshire state income tax on that money. This applies whether you work in New Hampshire or live there and work elsewhere.

However, New Hampshire does tax two specific types of income: interest and dividends. If you earn money from investments, savings accounts, or stock dividends, you may owe New Hampshire tax on that income. The tax rate on interest and dividends is 5 percent.

You still owe federal income tax on all income — wages, interest, and dividends — regardless of where you live. New Hampshire's lack of state income tax does not change your federal obligations.

Key Takeaways

  • New Hampshire has no income tax on wages, salaries, or self-employment income from a job or business.
  • Interest income and dividend income are taxed at 5 percent by New Hampshire, even though wages are not.
  • Federal income tax still applies to all types of income, and you must file federal returns as required.
  • If you have no interest or dividend income, you may not need to file a New Hampshire state tax return at all.

Who has to file a New Hampshire tax return

You must file a New Hampshire tax return if you had more than $2,400 in interest or dividend income during the year. This threshold applies to most filers. If your interest and dividends were $2,400 or less, you do not have to file a state return, even if you earned wages.

The $2,400 threshold is the same whether you are single, married, or filing in any other status. It is based only on the amount of interest and dividend income you received.

If you had no interest or dividend income at all, you have no New Hampshire state tax filing requirement. You may still need to file a federal return depending on your wages and other circumstances.

Interest and dividend income: the 5 percent tax

Interest income includes money earned from savings accounts, money market accounts, bonds, and certificates of deposit. Dividend income includes distributions from stocks, mutual funds, and investment accounts. Both are taxed at a flat rate of 5 percent in New Hampshire.

You report this income on the New Hampshire Form DP-10, which is the state's return for interest and dividend income. You will need statements from your bank or investment company showing how much interest or dividends you received during the year. These statements are usually mailed to you in January and are also called 1099-INT (for interest) or 1099-DIV (for dividends).

The 5 percent tax is calculated on the total interest and dividends you received, minus a small deduction. New Hampshire allows you to subtract $2,400 from your interest and dividend income before calculating the tax. This means if you had exactly $2,400 in interest and dividends, you would owe no tax.

Self-employment and business income

If you are self-employed or own a business, you do not owe New Hampshire income tax on your business profits or self-employment income. This is the same as the rule for wages — New Hampshire does not tax income from work.

You still owe federal self-employment tax and federal income tax on business income. You will also need to pay estimated federal taxes throughout the year if you expect to owe more than a certain amount. New Hampshire has no state equivalent to these requirements.

If your business generates interest or dividend income — for example, if you have business savings earning interest — that interest would be subject to the 5 percent New Hampshire tax on interest income.

Retirement income and pensions

New Hampshire does not tax income from pensions, 401(k) withdrawals, or individual retirement accounts (IRAs). Military pensions, teacher pensions, and other government or private pensions are all exempt from New Hampshire income tax.

Social Security benefits are also not taxed by New Hampshire. Even though Social Security may be taxable at the federal level, the state does not tax it.

If your retirement account generates interest or dividends — for instance, if you have a savings account earning interest — that interest income would still be subject to the 5 percent tax. The exemption applies to the withdrawal itself, not to investment earnings within the account.

How to file your New Hampshire tax return

If you owe New Hampshire tax on interest and dividends, you file using Form DP-10. You can obtain this form from the New Hampshire Department of Revenue Administration website or request it by mail. The form is short and asks for your name, address, Social Security number, and the total interest and dividend income you received.

You can file by mail or electronically through the state's online filing system. The important date to file is the same as the federal important date, which is typically April 15 of the following year. If you file your federal return late, your New Hampshire return is also considered late.

You do not need to file a New Hampshire return if your interest and dividend income was $2,400 or less. You also do not need to file if you had no interest or dividend income at all, even if you earned wages.

Frequently Asked Questions

Do I have to pay New Hampshire income tax if I work in New Hampshire but live in another state?

No. New Hampshire does not tax wages regardless of where you live. If you work in New Hampshire and live in another state, you do not owe New Hampshire income tax on your wages. You may owe income tax to the state where you live, depending on that state's rules.

What if I live in New Hampshire but work in a state that has income tax?

You will owe income tax to the state where you work. Most states tax income based on where the work is performed, not where you live. You may be able to claim a credit on your home state return for taxes paid to the other state, but this varies by state. Check with the state where you work for their specific rules.

Are capital gains taxed in New Hampshire?

Capital gains — profit from selling stocks, real estate, or other investments — are not taxed by New Hampshire. However, if you sell an investment and it generates interest or dividends before you sell it, that interest or dividend income is subject to the 5 percent tax.

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

No. If you earned only wages and had no interest or dividend income, you have no New Hampshire state tax filing requirement. You may still need to file a federal return depending on how much you earned.

What counts as interest income for the $2,400 threshold?

Interest income includes earnings from savings accounts, money market accounts, bonds, CDs, and any other account or investment that pays interest. It does not include capital gains from selling investments. Check your 1099-INT form from your bank or investment company to see your total interest income for the year.