New Hampshire has no state income tax on wages or salaries

New Hampshire does not tax money you earn from a job, whether you work full-time, part-time, or are self-employed. You will not owe state income tax on W-2 wages, 1099 contractor income, or business profits. This applies to everyone who lives in New Hampshire, regardless of how much you earn.

This is one of nine states in the U.S. with no state income tax on wages. If you move to New Hampshire from another state or work remotely for an out-of-state employer, you do not owe New Hampshire income tax on that work income. You may still owe income tax to your previous state or your employer's state, depending on where you worked and where you lived when you earned the money.

Key Takeaways

  • New Hampshire does not tax wages, salaries, self-employment income, or business profits.
  • New Hampshire does tax interest and dividend income at 5 percent, though certain retirement accounts and savings are exempt.
  • You still owe federal income tax to the IRS even though New Hampshire has no state income tax.
  • If you work in another state but live in New Hampshire, you typically owe tax only to the state where you worked, not to New Hampshire.
  • New Hampshire funds state services through property taxes, sales tax, and business taxes instead of income tax.

What New Hampshire does tax: interest and dividends

While New Hampshire does not tax wages, it does tax interest income and dividend income at a flat rate of 5 percent. This applies to money you earn from savings accounts, bonds, stock dividends, and other investments. The tax is called the Interest and Dividends Tax.

Some income is exempt from this tax. Retirement account distributions—including money from IRAs, 401(k)s, and pension plans—are not subject to the 5 percent tax. Social Security benefits are also exempt. Interest earned in a New Hampshire college savings plan (529 plan) is exempt as long as the money stays in the plan.

If your total interest and dividend income is below a certain threshold, you may not owe the tax at all. The threshold changes yearly. For the 2024 tax year, you do not owe the tax if your interest and dividend income is under $2,400 (or $4,800 if you file jointly). Check the New Hampshire Department of Revenue Administration website for the current year's threshold before you file.

Federal income tax still applies

New Hampshire's lack of state income tax does not affect what you owe to the federal government. You must still file a federal tax return with the IRS and pay federal income tax based on your income, filing status, and deductions. The federal tax system is separate from state taxes.

When you receive a W-2 from your employer or file as self-employed, your federal tax withholding is calculated the same way as it would be in any other state. If you have a second job or side income, you may need to adjust your federal withholding or make estimated tax payments to the IRS, just as you would anywhere else.

How New Hampshire funds state services without income tax

New Hampshire raises money for schools, roads, and state programs through other taxes. The state collects property tax (which funds local schools), a 9 percent sales tax on most goods, a meals and rooms tax, and business taxes including a 5.5 percent tax on business profits.

Property taxes in New Hampshire are among the highest in the nation because schools rely heavily on local property tax revenue rather than state income tax. If you own a home in New Hampshire, expect your property tax bill to reflect this funding model. Renters do not pay property tax directly, but landlords often pass some of the cost along through higher rent.

If you work in another state but live in New Hampshire

The state where you work has the first right to tax your wages. If you live in New Hampshire but work in Massachusetts, Vermont, or another neighboring state, you owe income tax to that state, not to New Hampshire. You will file a tax return in the state where you worked and claim a credit for taxes paid there on your federal return.

Some states have reciprocal agreements with New Hampshire that simplify this process. For example, if you live in New Hampshire and work in Vermont, you may be able to file only in New Hampshire under Vermont's reciprocal agreement. Check with your employer's payroll department or the tax authority in the state where you work to confirm which state should withhold your taxes.

Remote work and out-of-state employers

If you live in New Hampshire and work remotely for a company based in another state, you generally owe income tax only to New Hampshire—which means you owe no state income tax at all. Your employer may withhold taxes for their home state initially, but you can request a change to your W-4 or provide a New Hampshire residency certificate to stop that withholding.

Keep documentation showing where you live and where you work. If your employer questions your residency or you move during the year, having a lease, utility bill, or driver's license with your New Hampshire address can settle the question quickly. Some employers require this documentation before they will change your tax withholding.

Frequently Asked Questions

Do I have to file a New Hampshire tax return if I live there?

Only if you have interest or dividend income above the annual threshold (currently $2,400 for single filers). If your only income is wages and you have no investment income, you do not file a state return. You still file a federal return with the IRS.

What if I moved to New Hampshire mid-year?

You owe New Hampshire tax only on income earned after you moved there. For income earned before you moved, you owe tax to your previous state. Your employer can adjust your withholding once you provide proof of your new address and residency.

Are retirement withdrawals taxed in New Hampshire?

No. Distributions from IRAs, 401(k)s, pensions, and other retirement accounts are exempt from New Hampshire's 5 percent interest and dividends tax. Social Security is also exempt. You still owe federal income tax on these withdrawals.

Do I owe New Hampshire tax if I own a business there but live elsewhere?

New Hampshire taxes business profits at 5.5 percent regardless of where the owner lives. If you own a business in New Hampshire, you owe the business profits tax to New Hampshire even if you live in another state. You may also owe income tax to your home state on business profits.

Can I deduct property taxes on my federal return if I live in New Hampshire?

Yes. Property taxes are deductible on your federal return if you itemize deductions. The federal limit on state and local tax deductions (SALT) is $10,000 per year, so high property taxes in New Hampshire may exceed that limit.