Overview of New Hampshire Taxes
New Hampshire has no income tax on wages. The state does charge a 5% tax on income from interest and dividends. No cities in New Hampshire levy local income taxes.
This calculator reflects the 2018 federal withholding tax changes.
Click here to learn more about how the Trump Tax Plan will affect you.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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New Hampshire Paycheck Quick Facts
How Your New Hampshire Paycheck Works
The first thing you notice on your New Hampshire paycheck might be deductions for FICA (Federal Insurance Contributions Act) taxes. FICA taxes are Social Security and Medicare taxes, and they are withheld from each of your paychecks in order for you to pay into these systems. Social Security is taxed at 6.2% and Medicare at 1.45%. Your employer will match these contributions so the total amount is doubled. If you are self-employed, you will be responsible for paying 12.4% in Social Security tax and 1.45% in Medicare yourself. Also of note, any earnings in excess of $200,000 are subject to a 0.9% Medicare surtax, which goes unmatched by employers.
Even in a state like New Hampshire which does not levy income tax on wages, workers will still have to pay federal income taxes. How much you pay in federal income taxes is dependent on several factors including your salary, your marital status, the number of allowances you claim and if you have additional tax withheld from your paycheck. Your employer figures out how much to withhold from each of your paychecks for federal income taxes based on the information you provide on your W-4 form. Every time you start a new job or want to make changes to your allowances, you will need to fill out a new W-4.
Keep in mind that withholding calculations for federal income tax have changed for the 2018 tax year. The IRS released new guidelines in January to reflect changes that came with President Trump’s new tax plan. Taxpayers should have seen changes to their paychecks, to reflect the new tax plan, starting in February 2018. For the time being, you do not need to fill out a new W-4. Your employer will use the withholding information on your current form.
Your marital status and whether or not you have children are two factors that may affect how many allowances you can claim. The more allowances you claim, the less you will have withheld in taxes and the larger your paychecks will be. However, if you claim allowances that you do not qualify for, you will be underpaying your taxes all year and you’ll be slapped with a big tax bill in April to make up that difference.
How frequently you get paid affects the size of your paychecks. If you get paid weekly or bi-weekly, your checks will be smaller than if you get paid monthly. A big check may sound appealing, but remember you will be going longer in between getting paid so you have to make sure that you budget accordingly.
New Hampshire Median Household Income
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As we mentioned, New Hampshire does not have any income tax on wages. The state does tax income from interest and dividends at a flat rate of 5%. There are also no local income taxes in any New Hampshire cities.
If you move to the Granite State from a high income tax state like Minnesota or Oregon, you may get a pleasant surprise the first time you look at your paystub. Take a look at our New Hampshire mortgage guide to understand mortgage rates and other mortgage details in the Granite State.
How You Can Affect Your New Hampshire Paycheck
If you are looking to increase the size of your New Hampshire paycheck, you can start by asking your boss for a raise or for extra shifts, if that’s a possibility at your job.
If you can afford it, you should consider increasing how much of your salary you are putting into a 401(k) or 403(b) retirement fund. Upping your contribution will help you reach your savings goals and it will also help you to lower how much you pay in taxes. Money that goes into a 401(k) or 403(b) is taken out of your paycheck before taxes are applied so you are actually lowering your taxable income. While you don’t have to think about state income tax in New Hampshire, you do still pay federal taxes so this option helps you shelter more from the tax man.
Another option is to funnel more of your paycheck into a Health Savings Account or Flexible Spending Account if your employer offers them. Money goes into a HSA or FSA before taxes, just like a 401(k), so it works to lower your taxable income in the same way. One important difference with spending accounts and retirement accounts is that HSAs and FSAs do not roll over from year to year so be sure to use whatever money you put in there before the time runs out. If you have certain fixed medical expenses like co-pays or certain prescriptions, then a HSA or FSA could be a solid option for you.
If you find yourself consistently owing a lot of money to Uncle Sam at tax season, you should take a look at your W-4 form. You may be claiming too many allowances and underpaying your taxes all year. If this is the case, the simple fix is to claim fewer allowances. Alternatively, you can have your employer withhold a dollar amount from each of your paychecks that goes toward your taxes.
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2016 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics