New Hampshire is getting rid of its personal income tax

by philg

New Hampshire has long been wrongly considered a “tax-free” state. There was no income tax on wages and, unlike other New England states, there was no death tax. But for successful people there was always a 5% tax interest and dividends to consider. The state’s web site, however, says that this tax is being phased out by 2027:

A 5% tax is assessed on interest and dividend income. The State of New Hampshire does not have an income tax on an individual’s reported W-2 wages.

Please note, recently enacted legislation phases out the Interest and Dividends (I&D) Tax starting at 4% for taxable periods ending on or after December 31, 2023, 3% for taxable periods ending on or after December 31, 2024, 2% for taxable periods ending on or after December 31, 2025 and 1% for taxable periods ending on or after December 31, 2026. The I&D Tax is then repealed for taxable periods beginning after December 31, 2026.

Tennessee did something similar recently. Note that New Hampshire does not have a sales tax and, therefore, I think it will join Alaska as the only state that is tax-free on both income and purchases. Maybe we’re getting closer to the glorious age of a land value tax!

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3 thoughts on “New Hampshire is getting rid of its personal income tax”

  1. Not bad for a blue state. Just have to be happy with 2% property tax, no sunlight for 364 days/year & borrowing $1 million for a garden shed.

  2. In most countries they charge you taxes on any form of income (royalties, salary, profit, etc). In the US&A if you get more than 15 Dls of interest, you have to declare with proof documents. Royalties are a pain. My wife and I wrote a technical English to Spanish dictionary and I had to create a fictitious business for years to declare the royalties. My tax return was dozens of pages long in which I had to declare how many branches, employees, vehicles, and such, mostly zeroes. In Mexico, if you earn (a higher interest rate than in the US&A) on a savings account, the tax authority takes between 2-3% and you are done. However, if you are a dentist, like my brother in law, and you didn’t earn a penny because of the pandemic, you still have to do a monthly tax return in zeroes, or bear a fine.

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