New Hampshire became fully income-tax-free on January 1, 2025, when the Interest and Dividends (I&D) Tax was completely eliminated. New Hampshire never taxed wages or salaries — only investment income. There is also no sales tax. However, New Hampshire has among the highest property taxes in the US, averaging ~2.04% effective rate. Residents pay zero income tax, zero sales tax, but significant property taxes — making NH best for high earners who own modest property or rent.
At a glance
Key Facts
State Income Tax
0% — I&D Tax fully eliminated January 1, 2025; wages never taxed
Capital Gains Tax
0% state — no New Hampshire capital gains tax
Sales Tax
None — New Hampshire is one of five states with no general sales tax
Property Tax (Effective Rate)
~2.04% of market value — among the highest in the US
Estate & Inheritance Tax
None — NH repealed its estate tax in 2003; no inheritance tax
Business Taxes
Business Profits Tax (7.5%) and Business Enterprise Tax (0.55% on wages/interest/dividends paid)
Introduction
New Hampshire completed its journey to zero income tax on January 1, 2025. The Interest and Dividends (I&D) Tax — which taxed income from dividends and interest at 3% in its final year (phased down from 5%) — was fully eliminated, leaving New Hampshire with no income tax of any kind. New Hampshire never taxed wages or salaries. As of 2025, no form of personal income is taxed at the state level.
New Hampshire is unique among no-income-tax, no-sales-tax states — it is the only state in the continental US with neither. The revenue model depends heavily on property taxes, which are among the highest in the country. The result is a state that is highly attractive for high earners (especially remote workers) but potentially expensive for property owners, particularly in the southern corridor near Boston where property values are elevated.
New Hampshire's tax profile makes it particularly attractive for: Massachusetts workers who can work remotely (the Granite State is popular with Boston-area tech workers), retirees with investment income but modest housing (the I&D tax elimination removed the main tax on retirement portfolio income), and small business owners who can benefit from the business enterprise and profits tax structure.
Section 01
The New Hampshire Advantage: No Income Tax + No Sales Tax
New Hampshire is one of only five states with no general sales tax (along with Alaska, Delaware, Montana, and Oregon). Combined with no income tax, this creates a powerful advantage for certain residents:
Remote workers earning $150,000: Save $6,750/year vs Massachusetts (4.5% flat rate income tax) — a popular move for Boston-area tech workers commuting or working remotely across state lines
Retirees with $100K investment income: Previously paid $5,000 in I&D Tax (at 5% rate); now pay $0 — a clean $5,000/year saving since 2025
Shoppers near Massachusetts border: No sales tax creates a retail advantage — southern NH businesses benefit from Massachusetts residents crossing the border to avoid MA's 6.25% sales tax
High earners over $1M: Save $45,000+/year vs Massachusetts (5% standard + 4% surtax above $1M = 9% effective), $130,000+ vs California (13.3% top rate)
The counterweight: New Hampshire's high property taxes significantly reduce the overall tax advantage for property owners. A resident who saves $10,000/year in income taxes but pays $8,000/year more in property taxes than a comparable state has a net saving of only $2,000 — the property tax must be factored into the total picture.
Section 02
New Hampshire Property Tax: The Major Catch
New Hampshire's property taxes are among the highest in the US, averaging approximately 2.04% of market value. The state has no sales tax and limited income tax history, so property taxes have historically carried a heavy share of the state's revenue burden.
Property tax rates vary enormously by municipality. The state levies a 'Statewide Education Property Tax' on top of local rates. Example effective rates (approximate):
Concord: ~1.8%
Manchester: ~1.9%
Nashua: ~1.7%
Portsmouth: ~1.5%
Rural towns: often 2.5–3.0%+
On a $500,000 home (mid-range for southern NH near Boston), property tax at 2.04% equals $10,200/year — substantially higher than the national median of ~1.1% ($5,500 on a $500K home). For a Massachusetts resident paying $350,000 for a comparable home, the property tax at MA average (1.17%) is $4,095 — New Hampshire's higher property values and higher rates can actually make NH more expensive to own property in despite having no income or sales tax.
New Hampshire does offer a Low and Moderate Income Homeowner Property Tax Relief program for qualifying residents, and elderly exemptions in many municipalities.
Section 03
What Was the I&D Tax and Who Did It Affect?
The Interest and Dividends (I&D) Tax was a New Hampshire income tax on income from dividends and interest. It applied to New Hampshire residents who received income from stocks, bonds, savings accounts, and similar investment sources. Wages, salaries, and self-employment income were never taxed — only passive investment income.
The I&D Tax was phased down under a 2021 law: 5% (through 2022), 4% (2023), 3% (2024), then completely eliminated January 1, 2025. The phase-out was part of a broader Republican tax-reduction agenda in the state legislature.
Who the I&D Tax elimination matters for:
Retirees with portfolios: A retiree with $200,000/year in dividends previously paid $10,000 (at 5%) to $6,000 (at 3%) in NH I&D Tax — now $0
Investors with dividend stocks: Previously taxed on qualified dividends — now completely exempt
Bondholders: Municipal bond interest, savings account interest — all previously taxable, now exempt
Wage earners: Were not affected by the I&D Tax either before or after repeal
Section 04
New Hampshire for Retirees and Remote Workers
Retirees: New Hampshire is an excellent retirement state for those with investment income and moderate property holdings. With the I&D Tax gone since 2025, retirees pay no state tax on Social Security (always exempt), pension income, 401(k)/IRA distributions, dividends, interest, or capital gains. The only significant tax exposure is property tax. A retiree in a paid-off $300,000 home might pay $6,000–$7,000/year in property tax — but $0 in income or sales tax on any amount of investment or retirement income.
Remote workers from Massachusetts: Domiciling in New Hampshire while working remotely for a Massachusetts employer saves the 5% Massachusetts income tax (or 9% above $1M). The 'Massachusetts millionaire's tax' (4% surcharge on income above $1M added in 2023) has accelerated NH relocation. A $1.5M earner saves $13,500/year from avoiding the MA surtax alone, plus the base 5% rate ($75,000) — total saving of $88,500/year vs remaining in Massachusetts. NH's proximity to Boston, with the I-93 and Route 3 corridors, makes it practical for those who occasionally commute.
Business owners: Note that New Hampshire does have the Business Profits Tax (7.5%) and Business Enterprise Tax (0.55%) on business income — so business owners with NH-source income need to account for these in planning.
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The Interest and Dividends Tax was fully eliminated effective January 1, 2025. It was phased down from 5% (2022) to 4% (2023) to 3% (2024) before being completely repealed. New Hampshire wages and salaries were never taxed — only dividend and interest income was subject to the I&D Tax. As of 2025, New Hampshire has no income tax of any kind.
Q
Does New Hampshire have a sales tax?
No. New Hampshire is one of five states (with Alaska, Delaware, Montana, and Oregon) with no general state sales tax. There is no state or local sales tax on most purchases. Exceptions include a 9% tax on meals and room occupancy (restaurants, hotels), a 7% tax on car rentals, and a 10% tax on gambling winnings from licensed facilities — but standard retail purchases are untaxed.
Q
Does New Hampshire tax Social Security benefits?
No. New Hampshire never taxed wages or salaries, and Social Security income was always exempt from the I&D Tax. With the I&D Tax fully eliminated in 2025, all Social Security, pension, and retirement income is completely untaxed at the state level. Only federal income tax applies to Social Security under standard IRS rules.
Q
How high are New Hampshire property taxes?
Very high — averaging approximately 2.04% of market value, one of the top three highest effective rates in the US. A $400,000 home would cost approximately $8,160/year in property tax. Rates vary by municipality: southern NH towns near Massachusetts tend toward 1.5–2.0%, while rural northern towns can exceed 2.5–3.0%. New Hampshire's heavy reliance on property tax is the direct result of having no income or sales tax.
Q
What taxes does New Hampshire impose on businesses?
New Hampshire has two business taxes: the Business Profits Tax (BPT) at 7.5% on business income, and the Business Enterprise Tax (BET) at 0.55% on total wages, interest, and dividends paid by the business. These apply to businesses with gross receipts over $92,000 (2024 threshold). Pass-through owners (LLCs, S-corps) may owe these taxes on NH-source business income even without an income tax.
Q
Is New Hampshire good for remote workers?
Yes, especially for Massachusetts employees. NH residents who work remotely for MA employers can potentially establish NH domicile and avoid Massachusetts's 5% income tax (or 9% above $1M). The savings can be $5,000–$90,000+ per year depending on income. However, domicile must be genuinely established — working from NH on a laptop occasionally is not sufficient. Massachusetts has aggressively audited residents who claim to have moved to NH.
Q
Does New Hampshire have an estate tax?
No. New Hampshire repealed its estate tax in 2003. There is no state estate tax or inheritance tax. Only the federal estate tax applies, which starts above $13.61 million per individual (2024). New Hampshire is therefore attractive for estate planning, particularly for residents with significant investment portfolios.
Disclaimer:This guide is for educational purposes only and does not constitute tax or legal advice. Tax rates and rules change annually. Consult a qualified CPA or tax attorney before making any relocation or tax planning decisions.