New Hampshire Tax Guide: No Income Tax on Wages

Tax Overview

New Hampshire is now a true no-income-tax state after fully phasing out its Interest and Dividends Tax at the end of 2024. Previously, the state taxed interest and dividend income at 5%, but this tax has been eliminated entirely. New Hampshire does not tax wages, salaries, capital gains, or any other form of personal income at the state level, making it one of the most income-tax-friendly states in the nation.

New Hampshire also has no general sales tax, making it one of only two states (along with Montana in terms of no sales tax plus effectively no income tax on earned income) that impose neither major broad-based tax. This makes New Hampshire extremely attractive for both high earners and consumers, particularly those near the Massachusetts border who can shop tax-free.

The trade-off for these low taxes is exceptionally high property taxes. New Hampshire has some of the highest property tax rates in the nation, with an effective rate around 1.86%. Property taxes are the primary funding mechanism for schools and local government. The state offers some relief through a low-income homestead exemption and elderly exemptions, but property taxes remain the dominant tax burden for New Hampshire residents.