New Hampshire does not have a state income tax on wages or salaries

New Hampshire is one of nine states with no state income tax on earned wages. If you work in New Hampshire or live there and work elsewhere, you do not owe state income tax on your paycheck. Your employer will not withhold state income tax from your pay, and you will not file a state income tax return based on wages.

This applies whether you are a resident, a non-resident who works in the state, or someone who moved to New Hampshire during the tax year. The absence of a wage tax is a permanent feature of New Hampshire's tax code, not a temporary break or exemption.

Key Takeaways

  • New Hampshire has no state income tax on wages, salaries, or tips, so your paycheck is not reduced by state withholding.
  • Interest and dividend income is taxed by New Hampshire at 5 percent, though many people fall below the filing threshold.
  • If you moved to New Hampshire from another state, you may still owe taxes to your former state on income earned while you lived there.
  • New Hampshire funds state services through property taxes, sales taxes, and business taxes rather than income tax.

What income New Hampshire does tax

While New Hampshire does not tax wages, it does tax interest and dividend income at a flat rate of 5 percent. This includes interest from savings accounts, bonds, and CDs, as well as stock dividends and distributions from mutual funds or retirement accounts that are not tax-deferred.

You must file a New Hampshire tax return if your interest and dividend income exceeds $2,400 in a single year (or $3,600 if you are married filing jointly). Below that threshold, you owe no tax and do not need to file. If you have only wage income, you never file a New Hampshire return, regardless of how much you earned.

Capital gains — profit from selling stocks, real estate, or other assets — are not taxed by New Hampshire. Retirement account distributions from IRAs or 401(k)s are also exempt from New Hampshire tax, though they may be subject to federal tax.

How this affects your federal taxes

The absence of a state income tax does not change what you owe the federal government. You still file a federal return and pay federal income tax based on your total income, filing status, and deductions. New Hampshire's lack of a state tax simply means you have one fewer return to file and one fewer withholding to manage.

If you work in a state that does have income tax but live in New Hampshire, that other state may still tax your wages. You would owe tax to the state where you worked, not to New Hampshire. Some states have reciprocal agreements that exempt residents of non-income-tax states, but you should verify this with the state where you work.

Moving to or from New Hampshire

If you moved to New Hampshire partway through the year, you may owe state income tax to your previous state on wages earned while you lived there. For example, if you worked in Massachusetts from January through June and then moved to New Hampshire, Massachusetts will tax your income for those six months. You file a part-year resident return with your former state showing only the income earned during the months you lived there.

When you move away from New Hampshire, you do not owe New Hampshire tax on income earned after you leave the state. You file a final return with New Hampshire (if you had interest or dividend income above the threshold) and then file with your new state for the remainder of the year.

How New Hampshire funds state services without income tax

New Hampshire relies on property taxes, sales taxes, and business taxes to fund schools, roads, and state programs. Property taxes in New Hampshire are among the highest in the nation because the state does not use income tax revenue to offset local school funding. The state also taxes business profits, meals and rooms (hospitality tax), and tobacco and alcohol sales at higher rates than many states.

This funding structure means that homeowners and businesses in New Hampshire carry a larger tax burden than in states with income tax. Renters and wage earners benefit from the lack of income tax, but property owners and consumers pay more through other channels.

Self-employment and business income in New Hampshire

If you are self-employed or own a business in New Hampshire, you do not owe state income tax on your business profits. However, you still owe federal self-employment tax and federal income tax on that income. You also may owe New Hampshire's Business Profits Tax (BPT) if your business is structured as a corporation or partnership and meets certain thresholds, or the Business Enterprise Tax (BET) if you are a sole proprietor or LLC with gross revenue above $75,000.

These business taxes are separate from income tax and apply based on your business structure and revenue, not your personal income. A tax professional familiar with New Hampshire business taxation can help you understand which taxes apply to your situation.

Frequently Asked Questions

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

No. If your only income is wages, salary, or tips, you do not file a New Hampshire return. You file only your federal return. New Hampshire returns are required only if you have interest or dividend income above $2,400 (or $3,600 if married filing jointly).

If I work in Massachusetts but live in New Hampshire, do I owe Massachusetts income tax?

Yes. Massachusetts taxes income earned within the state regardless of where you live. You file a Massachusetts return on your wages and pay Massachusetts income tax. New Hampshire does not tax that income, but Massachusetts does. Some states have reciprocal agreements, but Massachusetts does not.

Are retirement account withdrawals taxed by New Hampshire?

No. Distributions from IRAs, 401(k)s, and other may have access to retirement accounts are exempt from New Hampshire tax. They are subject to federal income tax, but New Hampshire does not tax them. This applies to both traditional and Roth accounts.

What if I moved to New Hampshire mid-year and still have interest income from my old state?

File a part-year resident return with New Hampshire showing only the interest and dividend income you earned while living in the state. You may also owe a return to your previous state for income earned there. Each state taxes only the income earned during the months you were a resident.

Does New Hampshire tax capital gains from selling a house or stocks?

No. Capital gains are not taxed by New Hampshire. If you sell a home, stocks, or other assets at a profit, you owe no New Hampshire tax on that gain. You may owe federal capital gains tax, but New Hampshire does not tax capital gains.