New Hampshire Income Tax: Zero.
Here's What That Actually Means.
No tax on wages, salaries, capital gains, or (since January 1, 2025) interest and dividends. But the Business Profits Tax and Business Enterprise Tax still affect owners, and property taxes run among the nation's highest. Your strategy deserves the full picture.
Quick Answer
New Hampshire has no state tax on wages, salaries, capital gains, or investment income, and the Interest & Dividends Tax was fully repealed effective January 1, 2025. Business owners still pay the 7.5% Business Profits Tax and 0.55% Business Enterprise Tax, and property taxes run among the highest in the nation.
The New Hampshire Advantage
New Hampshire is unique among no-income-tax states: it never had a wage income tax, and the Interest & Dividends Tax was fully repealed in 2025. Today, New Hampshire residents pay zero state tax on wages, salary, capital gains, and investment income. But the state's Business Profits Tax (7.5%) and Business Enterprise Tax (0.55%) still affect business owners.
For New Hampshire residents, this creates a clear planning priority: minimize federal taxes aggressively, and structure your business to manage BPT/BET exposure. S-Corp optimization, retirement plan funding, and entity structure are especially important in New Hampshire's tax environment.
Positioned between Boston's high-income job market and New England's growing remote work population, New Hampshire attracts professionals who want the career opportunities of Massachusetts without the 5% state income tax. We help these transplants, and lifelong Granite Staters, build federal tax strategies that maximize their take-home income.
New Hampshire Tax Quick Facts
State Income Tax
None
Avg. Property Tax
1.86%
Sales Tax
None
Business Profits Tax
7.5%
Notable New Hampshire Tax Rules
- No income tax on wages, salaries, capital gains, or investment income
- Interest & Dividends Tax was fully repealed effective January 1, 2025
- Business Profits Tax (BPT) of 7.5% on business profits, with a return required once gross business income exceeds $109,000
- Business Enterprise Tax (BET) of 0.55% on the enterprise value tax base (compensation, interest, and dividends paid), with a return required above $298,000
- No sales tax, one of only five states with no state sales tax
- Property taxes are among the highest in the nation at 1.86% average, because there's no income or sales tax to fund local services
New Hampshire vs. National Average
| Category | New Hampshire | National Avg. |
|---|---|---|
| State Income Tax (Wages) | 0% | 4.6% |
| Avg. Property Tax | 1.86% | 1.07% |
| State Sales Tax | 0% | 5.09% |
| Business Profits Tax | 7.5% | 5.8% |
| Interest/Dividend Tax | 0% (repealed) | Varies |
Interest & Dividends Tax repealed Jan 1, 2025.
Key Strategies for NH Residents
BPT + Federal Optimization
Coordinate S-Corp comp across NH BPT and federal for max savings.
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Who We Serve in New Hampshire
Business Owners
New Hampshire's BPT and BET create a unique planning challenge. We optimize your S-Corp structure, reasonable compensation, and retirement contributions to minimize both New Hampshire business taxes and federal taxes simultaneously.
Small business CPA servicesReal Estate Investors
New Hampshire's high property taxes (1.86% average) make depreciation strategies especially valuable. We use cost segregation and the STR loophole for investors in the Lakes Region, White Mountains, and seacoast vacation rental markets.
CPA for real estate investorsMassachusetts Commuters & Remote Workers
Live in New Hampshire, work in (or remotely for) Massachusetts? You may be subject to Massachusetts income tax on your wages. We help navigate the NH-MA cross-border tax issues and optimize your federal filing.
Multi-state tax planningPhysicians
Dartmouth-Hitchcock, Elliot Health System, and other New Hampshire healthcare systems employ high-earning physicians who benefit from aggressive federal tax planning: retirement stacking, real estate investment, and entity structure for side income.
CPA for physiciansLive in New Hampshire? Let's Reduce Your Federal Tax Bill.
Book a free 30-minute consultation with our team. Tell us what you need, learn how Taxstra can help, and explore whether our services are a good fit. We serve New Hampshire clients 100% remotely, no travel required.
Book your free 30-minute tax fit callHow We Work Together
Book your free 30-minute tax fit call
A 30-minute call to assess your situation.
Tax Diagnostic & Plan
Optimized for both NH and federal taxes.
Implementation
Entity formation, S-Corp elections, BPT optimization.
Year-Round Advisory
Quarterly planning, proactive recommendations.
Illustrative Scenarios
Hypothetical composites, not clients or results. Actual outcomes depend on your facts. Educational, not individualized tax advice.
Portsmouth Business Owner: BPT + Federal Optimization
A consulting firm owner in Portsmouth earns $340K of profit through an S-Corp. New Hampshire does not tax wages, but the business owes the 7.5% Business Profits Tax on profit and the Business Enterprise Tax on compensation, interest, and dividends paid, with BET credited against BPT. A reasonable owner salary is deductible for BPT and counted in the BET base, so one salary decision moves federal payroll tax, BPT, and BET at once. A defined benefit plan sized from that salary adds a large federal deduction.
Lakes Region STR Investor: Vacation Rental Strategy
An investor owns 2 lakefront vacation rentals on Lake Winnipesaukee. If average guest stays are short and the owner materially participates, cost segregation depreciation is nonpassive and can offset other income on the federal return. New Hampshire has no tax on wages, but short-term room rentals owe the Meals and Rentals Tax, and the Business Profits Tax can reach rental income once gross receipts pass the filing threshold. High local property taxes belong in the cash flow model from day one.
NH-MA Commuter: Cross-Border Planning
A software engineer living in Nashua earns a $250K salary from a Boston employer. Massachusetts taxes a nonresident's wages for days worked in Massachusetts, so a log of office days versus remote days in New Hampshire sets the Massachusetts-source share. New Hampshire has no tax on wages, so there is no home-state credit question. A spouse's freelance business run from New Hampshire is generally not Massachusetts income, and an S-Corp for it is a federal payroll tax decision, not a state one.
Resources for New Hampshire Taxpayers
New Hampshire Tax Questions
Does New Hampshire have an income tax?
New Hampshire has no tax on wages, salaries, capital gains, or retirement income. The former Interest & Dividends Tax was fully repealed effective January 1, 2025. However, business owners are subject to the Business Profits Tax (7.5% on business profits, with a return required once gross business income exceeds $109,000) and the Business Enterprise Tax (0.55%).
I live in NH but work in Massachusetts. Do I owe MA income tax?
Generally yes. Massachusetts taxes income earned within its borders, including by NH residents who commute to MA for work. However, if you work remotely from New Hampshire for a Massachusetts employer, the rules become more nuanced. We help navigate this cross-border situation to minimize your total tax liability.
Why are New Hampshire property taxes so high?
With no income tax and no sales tax, New Hampshire funds local services (schools, roads, public safety) primarily through property taxes. The state average is 1.86%, but some towns exceed 2.5%. For real estate investors, this makes depreciation strategies and cost segregation especially valuable as a federal tax offset.
How does the Business Profits Tax affect my S-Corp decision?
The NH Business Profits Tax (7.5%) applies to your S-Corp's business income. Your reasonable compensation (W-2 salary) is deductible against BPT. This means the S-Corp election, reasonable compensation level, and retirement plan contributions all need to be optimized across both NH BPT and federal taxes, not just one or the other.
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New Hampshire has no state income tax. Let's make sure your federal strategy is just as optimized. We serve New Hampshire clients 100% remotely.
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