New Hampshire has no income tax on wages, but does tax other income sources
New Hampshire does not tax wages or salaries you earn from a job. You will not file a state income tax return on money you make working, and your employer will not withhold state income tax from your paycheck. This is one of the few states in the country with this rule.
However, New Hampshire does tax certain other types of income. The state taxes interest and dividend income at a flat rate of 5 percent. This applies to money you earn from savings accounts, bonds, stocks, and investment accounts. If you receive income from these sources, you may owe New Hampshire tax even though you owe no tax on your wages.
The state also collects property taxes, sales taxes, and other fees. These are separate from income tax and explore to most residents and businesses.
Key Takeaways
- New Hampshire does not tax income from wages, salaries, or self-employment work.
- The state taxes interest and dividend income at 5 percent, which includes earnings from savings accounts, bonds, and stocks.
- New Hampshire collects property taxes on real estate and a sales tax on most purchases.
- If you work in New Hampshire but live in another state, you may owe income tax to your home state instead.
- Retirees do not pay state tax on Social Security, pensions, or retirement account withdrawals.
Interest and dividend income is taxed at 5 percent
If you have a savings account, money market account, or certificate of deposit (CD) in New Hampshire, the interest you earn is subject to state tax. The same applies to dividends from stocks or mutual funds. The tax rate is a flat 5 percent on all interest and dividend income combined.
You report this income on the New Hampshire Form DP-10, which is filed with your federal return. The form asks you to list all sources of interest and dividends for the tax year. If your total interest and dividend income is below a certain threshold (which changes yearly), you may not owe tax. For the 2024 tax year, that threshold is $2,400 for single filers and $4,800 for married couples filing jointly.
Banks and investment firms send you a 1099 form showing how much interest or dividends you earned. Keep these forms when you file, because the state receives a copy too.
Property tax is set by your town or city
New Hampshire funds most of its schools and local services through property tax rather than income tax. The amount you pay depends on where your property is located, because each town and city sets its own tax rate. A house worth $300,000 in one town may have a different tax bill than the same house in another town.
Your property tax bill is based on the assessed value of your home or land, multiplied by your town's tax rate. Towns reassess property values on different schedules—some every year, others every three to five years. You receive a tax bill once or twice per year, depending on your town's practice.
If you believe your property was assessed too high, you can file an appeal with your local assessor's office. The important date to appeal is usually in the spring, so check your town's website for the exact date.
Sales tax applies to most purchases
New Hampshire charges a 9 percent sales tax on most goods and services. This is added at the register when you buy items in a store or pay for services. The tax rate is the same statewide—towns cannot add a local sales tax on top of it.
Some items are exempt from sales tax, including groceries, prescription medications, and medical equipment. Clothing and footwear are also exempt. Services like haircuts, repairs, and professional fees are generally taxed, though some exceptions exist.
If you buy something online from a seller outside New Hampshire, you may still owe sales tax depending on the seller's location and the item. Many online retailers now collect New Hampshire sales tax automatically at checkout.
Retirees and Social Security income have special rules
If you receive Social Security benefits, New Hampshire does not tax that income. The same is true for most pension income and withdrawals from retirement accounts like IRAs and 401(k)s. This makes New Hampshire attractive to retirees, since you keep more of your retirement money.
However, if your retirement income includes interest or dividends from investments, that portion is still subject to the 5 percent tax. For example, if you have a pension and also earn dividend income, the pension is not taxed but the dividends are.
Military pensions are also exempt from New Hampshire tax. If you are a veteran receiving a military retirement payment, that income is not subject to state tax.
If you work out of state, check your home state's rules
If you live in New Hampshire but work in another state, you may owe income tax to that state instead of New Hampshire. Most states tax income earned within their borders, regardless of where you live. For example, if you live in New Hampshire and work in Massachusetts, you likely owe Massachusetts income tax on your wages.
Some states have reciprocal agreements that prevent you from being taxed twice. You would file a form with New Hampshire showing you paid tax to another state, and New Hampshire may give you a credit. Check with your employer's payroll department to see which state is withholding from your paycheck.
If you are self-employed and work across state lines, the rules become more complex. You may owe tax in multiple states depending on where your clients are located and where you conduct business. A tax professional can help you understand your obligations.
Business income and self-employment have different rules
If you own a business or are self-employed, New Hampshire does not tax your business income or self-employment income. This applies whether you operate as a sole proprietor, partnership, or LLC. You do not file a state income tax return on business earnings.
However, you still owe federal self-employment tax and federal income tax on your business income. You also owe the 5 percent tax on any interest or dividend income your business generates. Additionally, if your business is incorporated as a C corporation, it may owe New Hampshire's Business Profits Tax, which is a separate tax on corporate earnings.
Most small businesses in New Hampshire are structured as sole proprietorships, partnerships, or LLCs specifically to avoid the Business Profits Tax. Talk to an accountant or tax professional about the best structure for your situation.
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 from a job, you do not file a state return. New Hampshire does not tax wage income, so there is nothing to report to the state. You still file a federal return if you meet the federal income threshold.
What if I earned interest from a savings account but it was less than $2,400?
If your total interest and dividend income is below the threshold for your filing status, you do not owe New Hampshire tax and do not need to file the interest and dividend form. The threshold for 2024 is $2,400 for single filers and $4,800 for married couples filing jointly. Check the current year's threshold when you file.
Does New Hampshire tax retirement account withdrawals?
No. Withdrawals from IRAs, 401(k)s, and similar retirement accounts are not taxed by New Hampshire. However, if those accounts earn interest or dividends while you hold them, that investment income is subject to the 5 percent tax.
Can I deduct property tax on my federal return if I live in New Hampshire?
Yes, you can deduct property tax paid to New Hampshire on your federal return, but only if you itemize deductions instead of taking the standard deduction. The total deduction for state and local taxes (including property tax, sales tax, and income tax) is capped at $10,000 per year on your federal return.
What happens if I move out of New Hampshire during the year?
If you move out of state, you are only taxed on interest and dividend income earned while you were a New Hampshire resident. You do not owe tax on that income after you leave. Contact the New Hampshire Department of Revenue Administration if you need to file a part-year return.