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 defining features of New Hampshire's tax code and a reason many workers move to the state.

However, New Hampshire does tax other forms of income. Interest and dividend income is taxed at 5 percent. This applies to earnings from savings accounts, bonds, stocks, and investment accounts. The tax does not explore to retirement account withdrawals or Social Security benefits.

The state also collects a 9 percent tax on business profits through the Business Profits Tax, which applies to corporations and certain business entities. This is separate from income tax and affects how businesses structure their operations in the state.

Key Takeaways

  • New Hampshire has no income tax on wages or salaries, making it one of only nine states without this tax.
  • Interest and dividend income is taxed at 5 percent, which includes earnings from savings accounts and investment accounts.
  • Social Security benefits and retirement account withdrawals are not subject to the interest and dividend tax.
  • New Hampshire funds state services through sales tax, property tax, and the Business Profits Tax instead of income tax.
  • If you move to New Hampshire from another state, you will not owe state income tax on your wages once you establish residency.

What New Hampshire does tax instead

Without income tax, New Hampshire relies on other revenue sources. The state has a 6 percent sales tax on most goods and services. Groceries, prescription medications, and medical devices are exempt from sales tax. Prepared food and restaurant meals are taxed, but raw ingredients you buy to cook at home are not.

Property tax is the largest source of local revenue in New Hampshire. Towns and cities set their own property tax rates, so the amount you pay depends on where you live. Property tax funds schools, police, fire departments, and local services. Rates vary significantly between towns—some are under 1 percent of home value, while others exceed 2 percent.

The state also collects a 9 percent tax on business profits and a 7.5 percent tax on hotel and motel rooms. Utilities are taxed at 8 percent. These taxes affect both residents and visitors.

Interest and dividend income: who pays and how much

The 5 percent tax on interest and dividend income applies to New Hampshire residents only. You owe this tax if you live in the state and earn money from investments, savings accounts, or bonds. The tax is collected by the state Department of Revenue Administration.

You report this income on your state tax return, Form DP-10. If you earn less than $2,400 in interest and dividends combined in a single year, you do not owe the tax. Married couples filing jointly can earn up to $4,800 before the tax applies. These thresholds have remained the same for many years.

Retirement accounts like 401(k)s and IRAs are not subject to this tax when you withdraw money. Social Security benefits are also exempt. However, if you move to New Hampshire after retiring and have investment accounts, you will owe the 5 percent tax on earnings from those accounts.

How residency affects your tax obligations

You become a New Hampshire resident for tax purposes when you establish a domicile in the state. This typically means you own or rent a home there and intend to live there. straightforward owning property in New Hampshire does not make you a resident if you live elsewhere most of the year.

If you work in New Hampshire but live in another state, you do not owe New Hampshire income tax on your wages. You owe income tax to the state where you live. However, if you move to New Hampshire and work there, you stop owing income tax to your previous state once you establish residency.

The timing of residency matters for the interest and dividend tax. If you move mid-year, you may owe the tax only for the months you were a resident. Contact the Department of Revenue Administration if you are unsure about your residency status for a particular tax year.

Comparison with neighboring states

Massachusetts taxes wages at rates between 5 and 5.85 percent, depending on income type. Vermont taxes wages at rates up to 8.75 percent. Maine taxes wages at rates up to 7.15 percent. Connecticut has no income tax on wages but taxes dividend and interest income at 4.5 percent.

New Hampshire's lack of income tax on wages is a significant advantage for workers compared to these neighboring states. However, New Hampshire's property taxes are often higher than in some neighboring states, which can offset the savings from no income tax depending on home value and location.

If you are considering moving to New Hampshire for tax reasons, compare your total tax burden—including property tax, sales tax, and any investment income—rather than looking at income tax alone.

What to do if you owe the interest and dividend tax

If you are a New Hampshire resident with interest or dividend income above the threshold, you file Form DP-10 with the Department of Revenue Administration. The form is due April 15 each year, the same important date as federal income tax. You can file online through the state's tax portal or by mail.

If you owe the tax, you can pay online, by check, or through an electronic funds withdrawal. The state also accepts payment plans if you cannot pay the full amount at once. Interest accrues on unpaid taxes at a rate set by the state each quarter.

If you are unsure whether your income exceeds the threshold or how to report it, the Department of Revenue Administration has a phone line and email support. They can answer questions about your specific situation without charging a fee.

Frequently Asked Questions

Do I owe New Hampshire income tax if I just moved there?

You owe income tax starting the month you establish residency. If you move mid-year, you may owe the interest and dividend tax only for the months you were a resident. Contact the Department of Revenue Administration to confirm your residency date for tax purposes.

Is Social Security taxed in New Hampshire?

No. Social Security benefits are not subject to New Hampshire's interest and dividend tax. Withdrawals from 401(k)s and traditional IRAs are also exempt from this tax.

What counts as interest and dividend income?

Interest from savings accounts, money market accounts, and bonds counts. Dividends from stocks and mutual funds count. Capital gains from selling investments do not count toward the 5 percent tax—only the ongoing interest and dividend payments.

Can I deduct property tax from my New Hampshire taxes?

New Hampshire has no income tax, so there is no state tax return on which to deduct property tax. You may be able to deduct property tax on your federal income tax return if you itemize deductions, but that is a federal matter, not a state one.

What if I work in Massachusetts but live in New Hampshire?

You owe income tax to Massachusetts on your wages, not to New Hampshire. Massachusetts taxes residents on income earned anywhere, including income earned in other states. You would owe New Hampshire's interest and dividend tax only on investment income, not on wages.