New Hampshire Tax Guide 2026

I&D Tax repeal — the headline 2025 reform

New Hampshire was historically NOT a 'no-income-tax' state in the pure sense — it imposed a 5% tax on interest and dividend income (RSA 77) on individuals, partnerships, and trusts. Chapter 327 of 2021 (signed by Gov. Sununu) phased out the I&D tax: • 2023: 4% • 2024: 3% • 2025: 0% — FULLY REPEALED • 2026: NH has no I&D tax With the I&D repeal, NH joins TN, AK, FL, NV, SD, TX, WA, and WY as a true no-personal-income-tax state. The repeal eliminates a meaningful tax burden for retirees and trust beneficiaries with significant investment income — NH now offers the cleanest investment-income tax treatment in the Northeast. NH still has NO wage/SE income tax; the I&D repeal only addressed investment income that was previously caught.

No sales tax — and the M&R exception

NH has NO statewide sales tax. Adjacent state residents (MA, VT, ME) regularly cross-shop in NH for tax-free purchases — particularly electronics, alcohol, and major appliances. Exception: MEALS & ROOMS TAX (M&R, RSA 78-A) of 8.5% applies to: • Restaurant meals and prepared food • Hotel/motel/B&B lodging (less than 185 days continuous occupancy) • Vehicle rentals • Short-term rentals (Airbnb, VRBO, etc.) — taxable M&R was 9% prior to 2022; reduced to 8.5% in HB 2 of 2021 (effective Oct 1, 2021). No other consumer-facing transaction tax. Cars, electronics, furniture, clothing all sales-tax-free in NH — a meaningful structural advantage for retail. Use-tax issues: NH residents purchasing from out-of-state may not be subject to NH use tax, but their home state (if not NH) may impose use tax. NH itself has no use tax. Economic nexus: NH has no general sales tax, so no Wayfair nexus framework needed for state-level sales tax (M&R operators have separate registration).

Business Profits Tax (BPT) and Business Enterprise Tax (BET)

BPT (RSA 77-A): 7.5% on the net profits of all 'business organizations' (corporations, partnerships, LLCs, sole proprietorships) with gross business income > $109,000. Business profits = federal taxable income with NH adjustments. Apportionment using single-sales factor for most industries. BET (RSA 77-E): 0.55% on the 'enterprise value tax base' = wages paid + interest paid + dividends paid. Filing threshold: gross receipts > $298,000 OR EVTB > $298,000 (indexed for 2026). BET is unique — it's effectively a value-added tax on the enterprise's compensation and capital costs. A labor-intensive business pays meaningful BET even if BPT-loss; a capital-light contractor with high gross receipts and W-2 employees faces real BET. BET CREDIT against BPT: BET paid in current year offsets BPT liability up to 100%. So in practice, businesses pay the HIGHER of BPT or BET — not both stacked. Minimum BPT: none (no minimum tax) — but BET starts owing once thresholds crossed. LLC fee: $100 annual report (RSA 304-C:102).

Property tax — the big trade-off

Statewide average effective property tax ~1.93% — one of the HIGHEST in the US (only NJ and IL are reliably higher). Why: NH has no income tax and no sales tax, so the state relies heavily on property tax to fund local government and education (~70% of K-12 funding comes from local property tax). Notable areas: • Hillsborough County (Manchester, Nashua): ~2.18% • Rockingham (Portsmouth, Hampton, seacoast): ~1.84% • Merrimack (Concord): ~2.27% • Carroll (Wolfeboro, Conway, lakes region): ~1.40% • Coos (rural North Country): ~1.78% Statewide Education Property Tax (RSA 76:3): part of the property tax bill is statewide-uniform, dedicated to education funding (~$1.78 per $1,000 assessed for FY 2024). No homestead exemption universally; some communities offer elderly/disabled exemptions on case-by-case basis (RSA 72:39-a). Elderly exemption / low-income elderly relief: locally optional, varies by town. Balance: A NH retiree with no wage income pays $0 income tax, $0 sales tax — but $7,000–$15,000+/yr in property tax on a $400k–$700k home. For high earners, the property tax burden is dwarfed by avoided income tax. For lower-income retirees who own a paid-off home, property tax can be challenging.

Other considerations

No estate tax, no inheritance tax, no gift tax — NH is fully clean for transfer planning. Real Estate Transfer Tax (RSA 78-B): 1.5% of price ($0.75/$100), paid by BOTH buyer and seller separately = effective 1.5% combined, charged separately at $0.75/$100 to each side. Motor fuels tax: $0.222/gal — moderate. No W-2 wage withholding requirements (no wage income tax). NH's structural appeal: highest in US for high-wage, high-investment-income earners (especially after I&D repeal). The property tax burden is the main offset, but for residents in lower-tax towns (rural Carroll, Coos counties), even property burden is moderate. NH is a magnet for MA executives, NY/CT retirees, and post-COVID remote workers — particularly those whose primary income is wages or investment returns rather than physical retail consumption.

Worked example: Mark Sutherland, Portsmouth-based remote software engineer (single, 2026)

Mark earns $280,000 W-2 from a Boston employer, working 100% remotely from his Portsmouth home. He also has $45,000 of qualified dividend income from his brokerage account. Owns a $625,000 Portsmouth home.

Federal: ordinary income tax on $280k wages + 15%/20% on qualified dividends + 3.8% NIIT on portion above MAGI threshold. Massachusetts: since Mark works 100% remotely from NH and the employer is willing to source his wages to NH (post-COVID, MA reversed the temporary remote-work sourcing rule in 2021), wages should be sourceable to NH → MA owes $0 (assuming no MA-day workdays). If any MA presence: MA owes 5% on MA-day income. New Hampshire: Wage income: $0 NH tax (no income tax) Dividend income: $0 NH tax (I&D repealed effective 2025) Total NH income tax: $0 Property tax on $625k Portsmouth home @ ~1.84%: ~$11,500/yr M&R Tax: paid on restaurant meals (8.5%) — passes through transaction by transaction. Mark's combined Mass+NH state burden: $0 if no MA-day workdays (vs ~$14,000 MA tax if all wages were MA-sourced). His only NH-specific cost is property tax ~$11,500. For every $10,000 of MA-source-avoided wage income (relative to the alternative of MA-source on all wages), Mark saves $500 in MA tax. With $280k all NH-sourced, his savings vs MA-sourced wages is ~$14,000/yr — a $2,500 net savings vs his property tax burden, plus he gets full freedom from sales tax and investment-income tax.

Statute references

• Interest & Dividends Tax — REPEALED 2025 — RSA 77 (Chapter 327 of 2021)
• Meals & Rooms Tax (8.5%) — RSA 78-A
• Business Profits Tax (7.5%) — RSA 77-A
• Business Enterprise Tax (0.55%) — RSA 77-E
• BET filing threshold — RSA 77-E:5
• Real Estate Transfer Tax — RSA 78-B
• Statewide Education Property Tax — RSA 76:3
• Elderly exemption (local option) — RSA 72:39-a

Related pages

• State Tax Comparison →
• Multi-State Allocation →
• Capital Gains Tax →