New Hampshire Paycheck Calculator

New Hampshire levied a 5% tax on interest and dividend income for close to a century. It never applied to wages, which is why the state was often described as having no income tax even while the I&D tax existed.

Legislation passed in 2021 set out a phased repeal, cutting the rate by one point a year from 2023. The final step took effect for tax years beginning in 2025, at which point the tax ceased entirely.

The practical consequence is administrative as well as financial: there is now no personal income tax return to file in New Hampshire at all. For retirees living on investment income — a group the I&D tax hit hardest — the change is significant, and it removed one of the main arguments for retiring across the border in a different state.

New Hampshire funds itself almost entirely through property tax, and its effective rates are among the highest in the United States. There is no state sales tax either, so property carries a share of the burden that most states spread across three sources.

Because New Hampshire towns fund schools locally, rates vary enormously between neighbouring municipalities — differences of several thousand dollars a year on a comparable home are routine. For anyone moving to the state, the town matters more financially than almost any other decision.

The absence of sales tax also produces a well-documented cross-border effect, with residents of Massachusetts and Maine shopping in New Hampshire for larger purchases.

A large share of southern New Hampshire's workforce commutes into Massachusetts, and the tax position is unfavourable. Massachusetts taxes income earned within the state regardless of where you live, so a New Hampshire resident working in Boston pays Massachusetts income tax on those earnings.

Because New Hampshire has no income tax, there is no home-state liability to offset it against and no credit to claim — the Massachusetts tax is simply paid. The advantage of living in New Hampshire is preserved only for income earned in New Hampshire, or for genuinely remote work performed at home.

This became contentious during 2020, when Massachusetts continued taxing New Hampshire residents working remotely. New Hampshire sued; the Supreme Court declined to hear the case. The rule now generally follows where the work is performed, so remote days worked from New Hampshire are not Massachusetts-taxable — worth checking if your withholding did not change when your working pattern did.