Overview of New Hampshire Taxes
New Hampshire has no income tax on wages and salaries. There is a 5% tax on interest and dividends. The state also has no sales tax. Homeowners in New Hampshire pay the third highest average effective property tax rate in the country.
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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 state tax quick facts
The Granite State has a reputation for being one of the lowest-tax states in the U.S., and rightly so. The state has no sales tax and no income tax on wages and salaries. While it does tax interest and dividends at a rate of 5%, even that is much lower than the regular income taxes in many other states.
The one tax that is significantly higher in New Hampshire than in the rest of the country is the property tax. Homeowners pay an average effective property tax rate of 2.19%, the third-highest rate in the U.S. Other taxes in New Hampshire include a cigarette tax, a gas tax and an excise tax on beer. In fact, excise taxes are the largest single source of revenue for the New Hampshire state government. Below, we’ll take a look at those and the rest of New Hampshire’s taxes.
New Hampshire Income Tax
There is no tax on personal income from wages and salaries in New Hampshire. Income listed on a W-2 is not taxed at the state level, which means that the vast majority of income earned in New Hampshire is not subject to any state taxes.
New Hampshire does tax income from interest and dividends, however. The Interest and Dividends Tax is a flat rate of 5%. The standard exemption for that tax is $2,400 ($4,800 for married persons filing jointly) so taxpayers with income from interest and dividends below that amount do not have to pay any taxes. Additional exemptions of $1,200 are available to residents who are either 65 years or older, blind or less than 65 years old, disabled and unable to work.
Taxpayers with income from interest and dividends above their total exemption will pay taxes only on the amount that exceeds the exemption. So, for example, a single filer earning $6,000 in interest annually would pay $180 in taxes. That’s: ($6,000 - $2,400) x 5%.
If you expect your tax liability to exceed $500, you are required to make estimated tax payments of 25% total taxes owed. Those payments are due on the 15th of the month in April, June, September and January of the following calendar year. Filing your return can be a rigorous task, but the tax preparation software can save you time and money.
New Hampshire Capital Gains Tax
New Hampshire does not tax capital gains, which are taxed as personal income in many other states.
New Hampshire Sales Tax
The state of New Hampshire has no sales tax and there are no local sales taxes in New Hampshire cities or counties. That means that nearly any product can be purchased tax-free, although there are exceptions. New Hampshire levies special taxes on electricity use ($0.00055 per kilowatt hour), communications services (7%), hotel rooms (9%) and restaurant meals (8%).
New Hampshire Property Tax
While New Hampshire lacks a sales tax and personal income tax, it does have some of the highest property taxes in the country. On average, homeowners in New Hampshire pay 2.19% of their home’s value in property tax every year. That’s the third-highest average effective property tax rate in the country. It serves as the primary source of revenue to support local services like schools and parks, and additionally goes to support the state school system.
If the thought of moving to New Hampshire excites you, don’t let the high property taxes deter you from considering purchasing a home. With no sales tax or personal income tax, there is plenty of room for saving some money. If you’d like to purchase a home in the Granite State or you’re looking to refinance your current home, take a look at our New Hampshire mortgage guide to all the essentials regarding mortgages in New Hampshire.
New Hampshire Gas Tax
The gas tax in New Hampshire is equal to 23.83 cents per gallon. That tax applies to both regular and diesel fuel. It is the 21st-lowest tax on regular gasoline in the country.
New Hampshire Cigarette Tax
New Hampshire’s excise tax on cigarettes totals $1.78 per pack of 20. This is the 20th-highest cigarette tax in the U.S. This tax is not paid directly by the consumer. Instead, the wholesaler must purchase stamps that identify if tax has been paid on a package of cigarettes.
Other tobacco products are also taxed, but at a different rate than cigarettes. The general tobacco product tax is equal to 65.03% of the wholesale price and applies to products such as chewing tobacco and snuff. In total, tobacco taxes generate over $200 million per year in revenue for the New Hampshire state government.
New Hampshire Alcohol Tax
Liquor and wine are not taxed in New Hampshire, but beer is. The tax on beer is 30 cents per gallon, or about 2.81 cents per 12 ounce beer. That is the 21st-highest beer tax in the country.
It should also be noted that liquor in New Hampshire can only be purchased at a state-run store. There are no private liquor stores. Since the state therefore has a monopoly on the sale of liquor, it collects all profits from liquor sales to consumers.
New Hampshire Estate Tax
While New Hampshire used to have an estate tax (called the “Legacy & Succession Tax”), it was repealed in 2002. The repeal became effective on January 1, 2003. As a result, there is no longer an estate tax in New Hampshire.
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Places with the Lowest Tax Burden
Are you curious how your tax burden stacks up against others in your state? SmartAsset’s interactive map highlights the counties with the lowest tax burden. Scroll over any county in the state to learn about taxes in that specific area.
Where you live can have a big impact on both which types of taxes you have to pay each year and how much money you spend on them. SmartAsset calculated the amount of money a specific person would pay in income, sales, property and fuel taxes in each county in the country and ranked the lowest to highest tax burden.
To better compare income tax burdens across counties, we used the national median household income. We then applied relevant deductions and exemptions before calculating federal, state and local income taxes.
In order to determine sales tax burden we estimated that 35% of take-home (after-tax) pay is spent on taxable goods. We multiplied the average sales tax rate for a county by the household income less income tax. This product is then multiplied by 35% to estimate the sales tax paid.
For property taxes, we compared the median property taxes paid in each county.
For fuel taxes, we first distributed statewide vehicle miles traveled down to the county level using the number of vehicles in each county. We then calculated the total number of licensed drivers within each county. The countywide miles were then distributed amongst the licensed drivers in the county, which gave us the miles driven per licensed driver. Using the nationwide average fuel economy, we calculated the average gallons of gas used per driver in each county and multiplied that by the fuel tax.
We then added the dollar amount for income, sales, property and fuel taxes to rank the counties to calculate a total tax burden.