About New Hampshire State Taxes

New Hampshire is unique because it has no state income tax on wages and salaries, but does tax dividend and interest income at 5%. This makes it attractive for wage earners and retirees living off of Social Security and pensions, but less attractive for those with significant investment income.

New Hampshire's Unique Tax Structure

New Hampshire's tax situation is one-of-a-kind:

• No Tax on Wages: W-2 income is completely tax-free at the state level
• No Tax on Salaries: All employment income is exempt
• No Tax on Social Security: Retirement benefits are untaxed
• No Tax on Pensions: Retirement account withdrawals are exempt
• Tax on Dividends/Interest: 5% tax on investment income (with exemptions)
• Capital Gains: Not taxed in New Hampshire

How New Hampshire Funds State Services

Without income tax on wages, New Hampshire relies on:

• Sales Tax: None - New Hampshire has no sales tax!
• Property Tax: Among the highest in the nation
• Business Taxes: Taxes on businesses and corporate income
• Excise Taxes: Taxes on specific goods like alcohol and tobacco
• Lottery: State lottery provides significant revenue

New Hampshire Tax Benefits

• No Wage Tax: Keep your entire paycheck (minus federal tax)
• No Sales Tax: No hidden sales taxes on purchases
• Retiree Friendly: No tax on Social Security or pensions
• No Capital Gains Tax: Investment gains are exempt
• Wage Earner Paradise: Perfect for those earning W-2 income

Frequently Asked Questions

Does New Hampshire have state income tax?

New Hampshire does not tax wages or salaries. However, it does tax dividend and interest income at 5%. For wage earners, this is effectively a no-income-tax state.

What is the dividend and interest tax in New Hampshire?

New Hampshire taxes dividend and interest income at 5%. However, there are exemptions for certain types of income and amounts below specific thresholds. Social Security benefits are completely exempt.

Is New Hampshire good for wage earners?

Yes! Without state tax on wages, wage earners save significantly. Combined with no sales tax, New Hampshire is excellent for those earning W-2 income.

Is New Hampshire good for investors?

It depends. Investors with significant dividend and interest income will pay 5% state tax on that income. However, capital gains are not taxed, so those making gains from stock appreciation pay no state tax.

Is New Hampshire good for retirees?

Yes! Retirees living off Social Security and pensions pay no state tax. However, those with significant investment income will pay 5% tax on dividends and interest.

New Hampshire vs. Other No-Tax States

New Hampshire compared to other no-tax states:

• Alaska: No income tax on any type of income
• Florida: No income tax on any type of income
• Nevada: No income tax on any type of income
• New Hampshire: No tax on wages, 5% on dividends/interest
• South Dakota: No income tax on any type of income
• Tennessee: No income tax on any type of income
• Texas: No income tax on any type of income
• Washington: No income tax on any type of income
• Wyoming: No income tax on any type of income

New Hampshire vs. High-Tax States

Annual tax savings for a $100,000 wage earner compared to other states:

• vs. California: Save ~$6,000-$9,000/year
• vs. Massachusetts: Save ~$5,000-$7,000/year
• vs. New York: Save ~$6,000-$7,000/year
• vs. Vermont: Save ~$4,000-$6,000/year

Tips for New Hampshire Residents

• Take advantage of no wage tax - maximize your earnings
• No sales tax is a huge benefit for purchasing power
• Be aware of high property taxes when choosing where to live
• If you have investment income, monitor the 5% tax on dividends/interest
• Retirees: social security and pensions are completely tax-free
• New Hampshire is ideal for wage earners and retirees living on fixed incomes