New Hampshire does not have a state income tax on wages or salaries
New Hampshire is one of nine states with no tax on the wages you earn from a job. You will not owe New Hampshire state income tax on your paycheck, no matter how much you make. This applies whether you work in New Hampshire or live there and work elsewhere.
However, New Hampshire does tax two specific types of income that other states often leave alone: interest and dividends. If you receive income from investments, savings accounts, or stock dividends, New Hampshire taxes that money at a flat rate of 5 percent. This tax is called the Interest and Dividends Tax, and it applies to residents only.
The lack of wage tax does not mean New Hampshire has no taxes at all. The state funds itself through a sales tax, property taxes, and taxes on specific activities like meals and lodging. Understanding which income New Hampshire taxes and which it does not will help you plan your filing correctly.
Key Takeaways
- New Hampshire residents pay no state income tax on wages, salaries, or self-employment income from a job or business.
- New Hampshire taxes interest and dividend income at 5 percent, which applies only to residents with investment income above certain thresholds.
- You still file a federal tax return even if you owe no New Hampshire state tax, because federal income tax applies in all states.
- If you work in New Hampshire but live in another state, that other state may tax your wages — New Hampshire does not.
- New Hampshire funds state services through sales tax, property tax, and taxes on meals and lodging instead of income tax.
The Interest and Dividends Tax: What income is actually taxed
Even though New Hampshire has no wage tax, it does tax investment income. The Interest and Dividends Tax applies to money you earn from savings accounts, bonds, stocks, mutual funds, and other investments. The tax rate is a flat 5 percent on this income.
Not all investment income is taxed. New Hampshire exempts the first $2,400 of interest and dividend income per person per year. This means if you earn less than $2,400 in interest and dividends in a year, you owe no New Hampshire tax on that money. If you earn $3,000, you pay 5 percent only on the $600 above the threshold.
Married couples filing jointly get a combined exemption of $4,800. This exemption applies to each spouse's income separately, so a couple where each spouse earns $2,400 in dividends owes nothing. A couple where one spouse earns $5,000 in dividends pays 5 percent on $2,600 of that income.
You report this income on Form NH-1040, the New Hampshire Individual Income Tax Return. You will need to gather statements from your bank, brokerage, or investment company showing the interest and dividends you received during the year. These are the same documents you use to file your federal return.
Who must file a New Hampshire tax return
You must file a New Hampshire state return if you are a resident and your interest and dividend income exceeds the exemption threshold for your filing status. If you earn only wages and no investment income, you do not have to file a New Hampshire return, even if you live there.
New Hampshire defines a resident as someone who lives in the state for more than six months of the year, or who maintains a permanent home there even if they spend part of the year elsewhere. If you moved to New Hampshire partway through the year, you may owe tax only on the income earned after you became a resident.
If you are a New Hampshire resident with investment income below the threshold, you do not have to file. However, if you had taxes withheld from your interest or dividends, you may want to file anyway to claim a refund of the overpayment.
Federal taxes still explore even with no state income tax
The fact that New Hampshire has no wage tax does not affect your federal income tax. You must file a federal return with the IRS if your income exceeds the federal threshold, regardless of whether you owe New Hampshire state tax. Federal tax rates and rules explore the same way in New Hampshire as in every other state.
Your federal return and your New Hampshire return are separate documents. You file your federal return with the IRS using Form 1040. You file your New Hampshire return with the New Hampshire Department of Revenue Administration using Form NH-1040. The income you report on each may be different because federal and state rules are not identical.
For example, some deductions allowed on your federal return may not be allowed on your New Hampshire return, and vice versa. Your federal adjusted gross income (AGI) is often the starting point for your New Hampshire return, but you may need to make adjustments specific to New Hampshire law.
What happens if you work in New Hampshire but live elsewhere
If you live in another state and work in New Hampshire, you do not owe New Hampshire income tax on your wages. New Hampshire has no income tax to withhold or pay. However, your home state may tax your wages even though you earned them in New Hampshire.
Most states tax residents on income earned anywhere, including income earned in other states. So if you live in Massachusetts and work in New Hampshire, Massachusetts will tax your wages. You may be able to claim a credit on your Massachusetts return for any taxes paid to other states, but you should check your home state's rules.
If you live in another state with no income tax — such as Florida, Texas, or Wyoming — you owe no state income tax on your New Hampshire wages. You would still owe federal income tax.
How to file your New Hampshire return if you owe tax
You file your New Hampshire return using Form NH-1040, the Individual Income Tax Return. You can obtain this form from the New Hampshire Department of Revenue Administration website or request it by mail. The form asks for your name, address, filing status, and the amount of interest and dividend income you received.
You will need to attach schedules or statements showing where your interest and dividend income came from. Your bank, brokerage, or investment company sends you a Form 1099-INT (for interest) or Form 1099-DIV (for dividends) by January 31 each year. These forms show the exact amounts you earned and are the documents you use to complete your New Hampshire return.
The important date to file your New Hampshire return is the same as the federal important date: April 15 of the year following the tax year, unless that date falls on a weekend or holiday. If you file your federal return and request an extension, the extension applies to your New Hampshire return as well.
You can file your New Hampshire return by mail or electronically. The state does not offer free electronic filing through its own system, but some tax software providers include New Hampshire returns in their free or low-cost offerings. Check the New Hampshire Department of Revenue Administration website for a current list of approved software.
Common situations where New Hampshire residents owe tax
A retiree living in New Hampshire who receives Social Security and a small pension owes no New Hampshire income tax on either. Social Security is not taxed by New Hampshire, and pension income is not considered wages or investment income. However, if that same retiree has a savings account earning $3,000 in interest, they owe 5 percent tax on $600 of it.
A New Hampshire resident who works as a freelancer or runs a small business owes no New Hampshire income tax on that self-employment income. Self-employment income is not taxed by the state. But if the business generates investment income — such as interest from a business savings account — that income is subject to the 5 percent tax.
A couple living in New Hampshire where one spouse works and the other receives investment income from an inherited portfolio may owe New Hampshire tax only on the investment income, and only if it exceeds $4,800 combined for the year. The working spouse's entire salary is tax-free at the state level.
Frequently Asked Questions
Do I have to file a New Hampshire return if I only have wage income?
No. If you are a New Hampshire resident with only wages, salary, or self-employment income and no interest or dividend income, you do not have to file a state return. New Hampshire taxes only investment income, not wages.
Is Social Security taxed by New Hampshire?
No. New Hampshire does not tax Social Security benefits. If Social Security is your only income, you owe no New Hampshire state tax and do not have to file a state return.
What if I moved to New Hampshire partway through the year?
You are considered a resident for the portion of the year you lived in New Hampshire. You report only the interest and dividend income you earned while a resident. If you earned investment income before you moved, that income is taxed by your previous state, not New Hampshire.
Can I file my New Hampshire return electronically?
Yes, but not through a state-run system. You can file electronically using tax software approved by the New Hampshire Department of Revenue Administration. Check their website for a current list of providers that offer electronic filing for New Hampshire returns.
Do I owe New Hampshire tax on capital gains from selling stock?
No. New Hampshire taxes only interest and dividend income, not capital gains. If you sell stock at a profit, you owe federal capital gains tax but no New Hampshire state tax on the gain itself.