New Hampshire does not have a state income tax on wages or salaries
New Hampshire is one of nine states with no income tax on the money you earn from working. You will not owe state income tax on your paycheck, whether you work full-time, part-time, or are self-employed. This applies to W-2 wages, 1099 contractor income, and business profits.
However, New Hampshire does tax certain types of investment income. The state levies a 5% tax on interest and dividend income above a threshold amount. This distinction matters if you have savings accounts, bonds, stocks, or other investments that generate returns — those earnings may be subject to state tax even though your wages are not.
Because New Hampshire has no wage tax, the state funds itself through other revenue sources: a 9% sales tax on most goods, property taxes, business taxes, and various licensing and permit fees. This funding structure is why New Hampshire property taxes tend to be higher than in states with income taxes.
Key Takeaways
- New Hampshire does not tax wages, salaries, or self-employment income from work.
- The state does tax interest and dividend income from investments at a 5% rate, with some income thresholds that vary by filing status.
- New Hampshire funds state services through sales tax, property tax, and business taxes instead of income tax.
- If you work in New Hampshire but live in another state, you do not owe New Hampshire income tax on your wages.
- If you live in New Hampshire and work in a state with income tax, you may owe that state's income tax on your earnings.
How the 5% interest and dividend tax works
New Hampshire's tax on investment income applies only to interest and dividends, not to capital gains. If you sell a stock or property at a profit, you do not owe New Hampshire state tax on that gain. The 5% tax applies only to the interest your savings account earns or the dividends your stocks pay out.
The tax kicks in only above a threshold amount. For the 2024 tax year, you owe the 5% tax on interest and dividends above $2,400 if you file as single, or above $3,600 if you file as married filing jointly. This means modest savings account interest or small dividend payments may fall below the threshold and owe nothing.
You report this income on New Hampshire's Form LS (Interest and Dividends Tax Return) when you file your state return. Your bank or investment company will send you a 1099-INT or 1099-DIV form showing how much interest or dividends you received during the year, and you use that figure to determine whether you owe tax.
What types of income are not taxed in New Hampshire
Beyond wages and salaries, New Hampshire does not tax Social Security benefits, retirement distributions from IRAs or 401(k)s, pension income, or military retirement pay. If you are retired and living on pension or retirement account withdrawals, you will not owe New Hampshire state income tax on those funds.
Capital gains — the profit you make when you sell an investment at a higher price than you paid — are also not subject to New Hampshire state tax. This is different from the interest and dividend tax, which does explore. Long-term and short-term capital gains are both exempt from state tax.
Unemployment benefits, workers' compensation, and certain other government information payments are also not taxed by New Hampshire. The state's tax code is narrowly focused on investment income, which is why it raises relatively little revenue compared to the income taxes in neighboring states.
Working in New Hampshire vs. living in New Hampshire
If you live in another state but work in New Hampshire, you do not owe New Hampshire income tax on your wages. New Hampshire has no income tax to owe. However, you will owe income tax to your home state on those wages, because most states tax residents on income earned anywhere.
If you live in New Hampshire but work in Massachusetts, Vermont, Maine, or another neighboring state with income tax, you will owe that state's income tax on your wages. You may also owe New Hampshire's interest and dividend tax if you have investment income above the threshold. Some states offer a credit for taxes paid to another state, which can reduce your home state tax bill, but you should check your home state's rules.
The key rule is that the state where you work can tax your wages, and the state where you live can also tax your wages. New Hampshire, having no income tax, does not claim wages at all — but your home state likely will.
How New Hampshire funds state services without income tax
New Hampshire relies on a 9% sales tax on most retail goods and services to fund schools, roads, and state programs. The sales tax applies when you buy items in stores, though groceries and prescription medications are exempt. This means New Hampshire residents pay sales tax on more purchases than residents of some other states.
Property tax is also a significant revenue source. New Hampshire has no state property tax, but towns and cities set their own property tax rates to fund local schools and services. These local rates vary widely by town, and property taxes in New Hampshire tend to be higher than in states that use income tax to fund education.
The state also collects business taxes, licensing fees, utility taxes, and taxes on specific goods like tobacco and alcohol. This mix of revenue sources means New Hampshire residents pay taxes in different ways than residents of income-tax states, but the total tax burden varies depending on your income level, spending habits, and property ownership.
Filing requirements if you live in New Hampshire
If you live in New Hampshire and have only wage income with no investment income above the threshold, you do not need to file a New Hampshire state tax return. Your employer withholds federal income tax from your paycheck, and that is the only state-level tax you owe.
If you have interest or dividend income above the threshold ($2,400 single, $3,600 married filing jointly for 2024), you must file New Hampshire's Form LS to report that income and pay the 5% tax. You file this form with the New Hampshire Department of Revenue Administration, separate from your federal return.
If you are self-employed, you do not owe New Hampshire income tax on your business income, but you do owe federal self-employment tax and federal income tax. You also owe New Hampshire's interest and dividend tax if you have investment income above the threshold. Check the New Hampshire Department of Revenue Administration website for current filing important date and forms.
Frequently Asked Questions
Do I have to pay New Hampshire income tax if I work there but live in another state?
No. New Hampshire has no income tax, so it does not tax anyone's wages, whether they live in the state or not. However, your home state will likely tax your wages, because most states tax residents on income earned anywhere. You would owe tax to your home state, not to New Hampshire.
Is Social Security taxed in New Hampshire?
No. New Hampshire does not tax Social Security benefits, pensions, or retirement account withdrawals. If you are retired and living on these income sources, you will not owe New Hampshire state income tax. You may owe federal income tax on some of these sources, depending on your total income.
What if I have a small savings account that earns interest — do I owe the 5% tax?
Only if your total interest and dividend income exceeds the threshold for your filing status. For 2024, that threshold is $2,400 for single filers and $3,600 for married filing jointly. If your interest is below that amount, you owe no New Hampshire tax on it.
Do I owe New Hampshire tax on capital gains from selling stocks?
No. New Hampshire does not tax capital gains. You can sell stocks, real estate, or other investments at a profit and owe no New Hampshire state tax on that gain. The 5% tax applies only to interest and dividends, not to profits from selling investments.
Why does New Hampshire not have an income tax?
New Hampshire's state constitution and political history have long opposed income tax. The state funds itself through sales tax, property tax, and business taxes instead. This means New Hampshire residents pay taxes differently than residents of income-tax states, but the total tax burden depends on your individual spending and property ownership.