Whether you’re preparing well in advance, or the tax season has snuck up on you, if you’ve made it to our guide you’re likely looking for some help with your New Hampshire state taxes. To make your life easier, we’ve put together a comprehensive guide to taxes in New Hampshire as well as a handy New Hampshire income tax calculator you can use when filing.

This year, filing your federal and New Hampshire taxes will be easier than ever, especially if you enlist the help of one of our tax professionals.

New Hampshire has a reputation for being a state with breathtaking scenery, picturesque seasonal changes, a fairly low cost of living, and a lot of opportunity for new and long-time residents. But, did you know that it’s also one of the states with the lowest taxes?

With no income tax on wages and no sales tax, it’s no wonder that New Hampshire has the 11th lowest tax burden of all 50 states and Washington D.C. (Tennessee currently has the lowest tax burden). According to a 2019 state tax analysis, if you moved to New Hampshire from a state with higher taxes (like New York or California), the average savings on your tax bill would be over $6,000. Now, that’s saying something!

In this guide, we’ll deep dive into taxes in New Hampshire and what these taxes mean to your wallet.

Because there is no income tax on wages, there are no New Hampshire income tax brackets. Instead, there is a flat tax rate of 5% that is only applied to earnings from interest and dividends.

While there aren’t any New Hampshire tax brackets, remember that there are seven federal tax brackets. So, you should still understand how tax brackets work for your federal return. The Internal Revenue Service (IRS) uses a progressive income tax bracket system, meaning that higher levels of income are taxed at higher rates. So, the more you make, the more taxes you’ll have to pay.

Note: For more on how to complete your federal taxes, head over to our federal tax guide.

While New Hampshire does not tax your salary and wages, there is a 5% tax on income earned from interest and dividends. This tax is only paid on income from these sources that is $2,400 or more for single filers and $4,800 or greater for joint filers.

You might initially assume that if you have no major investments, like stocks and bonds, that you don’t owe any income taxes. However, the interest earned on your bank accounts is part of the equation. Additionally, investment income can come in smaller payouts as opposed to just one lump sum from a sale.

So, keep in mind that you’ll need to keep track of any earnings you make throughout the year. No matter how small they might seem, if you have a lot of investments, it could add up. Having the right information when filing your taxes will be important because if you fail to pay or even just under-pay it could mean serious tax penalties.

If you expect to owe more than $500 in income taxes from interest and dividends, you’ll need to make estimated payments, the first of which is due April 15th (or the next business day if it falls on a weekend).

However, if you’re 65 years or older, disabled and unable to work, or are blind, there is a $1,200 exemption.

Note: Learn more about New Hampshire’s exemptions and other tax incentives in the dedicated section below.

While there was not a capital gains tax in New Hampshire for many decades, that changed in 2001. This change went into effect in order to help fund education initiatives that were lacking the necessary financial resources.

Now, there’s a 5% capital gains tax. But what exactly is the capital gains tax? It’s a tax that is levied on the profits made from the sale of assets, such as real estate or stocks. Fortunately, this tax only affects a very small portion of New Hampshire taxpayers who have large assets to sell.

If you’ve sold one or more assets this year, discuss your circumstances with one of our tax experts so we can help you determine whether you’re responsible for paying the New Hampshire capital gains tax.

New Hampshire is one of only five states (including Alaska, Montana, Delaware, and Oregon) that doesn’t have a statewide sales tax. Typically, sales taxes are applied to retail items or services and act as a good source of revenue for the state budget. But, New Hampshire legislators have decided to forget a sales tax. This means you’ll be able to take advantage of a major cost savings throughout the year, especially on big-ticket items.

However, there are some taxes charged on certain goods and services. We’ll cover these taxes, known as “excise taxes” in the next section.

An excise tax is sometimes charged in addition to standard sales tax on certain goods and services. This may be the case if the item is a non-necessity or can have a negative impact on the environment or community health. The excise tax applied on goods such as alcohol and tobacco is sometimes referred to as a “sin tax” because it is often implemented to mitigate the use of these substances.

Here are the main excise taxes you should be aware of if you’re a New Hampshire taxpayer:

The sale of liquor is controlled by the state of New Hampshire. The state has levied a standard $0.30 per gallon excise tax on all liquor sold at retail stores, including beer and wine. However, domestic wine is subject to a 5% markup.

Like many states, New Hampshire has decided to enforce an additional tax on cigarettes and tobacco. For pack of 20 or 25 cigarettes, you will pay an excise tax of $1.78 or $2.23 respectively. Additionally, all other tobacco products are taxed at 65.03% of the wholesale price.

While these rates might seem high, compared to many other states they are fairly conservative. For example, Connecticut, Rhode Island, and New York all have cigarette taxes that exceed $4 per pack.

Known as the Electricity Consumption Tax, it comes at a rate of $0.00055 per kilowatt hour of electricity used.

Vacationing somewhere in New Hampshire? You’ll have to pay a pretty penny for your splurges. A 9% excise tax is charged on rented rooms and vehicles. Additionally, this tax also applies to meals for patrons of hotels and restaurants.

For the transfer or sale of real estate property, there is an excise tax of $0.75 per $100 of the price or consideration of the transfer.

You’ll have to pay a 7% excise tax on your phone bill and other two-way communication services.

New Hampshire doesn’t have a penalty for not having health insurance. That said, if you don’t have health insurance, you should know that New Hampshire is actually well known for having a high-quality healthcare system.

Since New Hampshire has no income tax on wages, and no statewide sales tax, property taxes make up the main source of revenue. In fact, homeowners in New Hampshire pay some of the highest property taxes in the country along with residents of New Jersey, New York, Connecticut, and California.

The estimated median property tax is 1.86% or $4,636. However, many taxpayers in the state pay much higher rates, including those in Rockingham County which collects the highest property taxes. Rockingham County residents pay an average tax bill of about $5,344. However, some counties have much lower property taxes, like Carroll County, where homeowners pay an average of $2,582 in property taxes.

While these property tax bills may seem like a lot to owe the state, there are many forms of property tax relief for New Hampshire taxpayers who qualify as low or moderate income. Additionally, you have the opportunity to more or less control how much you pay in property taxes by choosing where to live.

In some cases, it may be advantageous to commute further to work to enjoy a substantial tax savings. However, with fairly reasonable property taxes in comparison to other states and a median household income that’s on the higher end of the spectrum (over $70,000), many New Hampshirites are willing to pay the extra costs to live in the cities they love to call home.

Previously referred to as the Legacy & Succession tax, there is no longer an inheritance tax in New Hampshire, for deaths occurring on or after January 1, 2003. Many other states, like Alabama and Florida, have also stopped collecting inheritance tax over the last decade.

So, if you receive an inheritance from a loved one, you can enjoy your gift without having to worry about paying taxes on it.

Note: You may have to pay inheritance taxes if the owner of the estate was a resident of another state. Additionally, you may be subject to federal inheritance and estate taxes.

Tax credits are subtracted from your tax bill, after you’ve calculated your initial tax liability. As a New Hampshire taxpayer, there are several tax credits that you might be able to take advantage of, including:

• Education Tax Credit: For donations (up to $60,000) to a qualifying scholarship program. Individuals and businesses may apply for this credit.
• Veteran’s Property Tax Credit: Certain wartime veterans, their wives, or widows who own property may be eligible for a tax credit of $51. In some cases, a county may raise this credit up to $750.
• Disabled Veteran’s Property Tax Credit: If a veteran was permanently disabled due to a service-related injury, they may be eligible for a $701 tax credit on their primary residence.
• Veteran’s Widow Credit: Widows of veterans killed while on active duty in the military may receive a property tax credit of $700 to $4,000.

There are fewer tax credits for individuals in New Hampshire than other many other states because there are no taxes on your W2 income, and therefore, there’s a lower tax burden altogether.

An exemption is a tax incentive that reduces your tax liability.

A personal exemption is an automatic exemption that you’re entitled to on your state taxes. You can subtract certain amounts for yourself and any dependents. See the table below to determine your personal exemption:

In addition to the personal exemption, there are a few other exemptions you should see if you qualify for, including:

• Elderly Exemption: New Hampshirites who are over 65 years old may be eligible for a property tax exemption. Anyone who wants to apply must have lived in the state for at least three years.
• Disability Exemption: In New Hampshire, there is an exemption available for individuals who are eligible under Title II or Title XVI of the federal Social Security Act for benefits to the disabled. The city or town of residence will determine the dollar amount of this exemption.
• Exemption for Improvements Made to Assist a Disabled Person: To claim this exemption, the modifications to your property must have been made for the disabled individual while they were a resident. And, they must still reside there at the time of filing your taxes.

Having trouble figuring out your exemptions? Our tax professionals can help you maximize your exemptions to make sure you’re not unnecessarily over-paying on your taxes.

Now that you have a fairly good idea of what taxes you’ll be responsible this year, you can calculate your tax liability. But, how do you go about that? Here are our expert tips for calculating your New Hampshire state taxes:

• For property taxes, visit your county tax administrator’s website to find out the exact rate. For example, residents of Coos County will use the designated site to file and pay their property taxes. You should be provided with information on the assessed value of your home, which is determined by the appraiser.
• Use eFile to ensure that your to submit your taxes promptly.
• Make sure you double-check all calculations.
• Submit your taxes as early as possible; waiting until the April 15th deadlines will only make the process more stressful.

Note: We even offer free consultations.

If you will owe $500 or more, you can make estimated payments. Property taxes are due:

• November 15th
• February 15th
• May 15th

If any of these dates falls on a weekend, the payment is due the next business day. Making your payments on time is highly recommended to avoid interest and penalties.

There are several simple ways to pay your New Hampshire taxes:

To wrap up our New Hampshire state tax guide, here are a few interesting facts about the state’s tax policies:

Don’t forget that you are also responsible for filing and paying federal taxes. When preparing your federal return, here are a few things you should keep in mind:

• Your federal taxes must be filed by April 15th
• Federal taxes have their own income, property, and sales tax rates that you must abide by
• You’ll need to pay federal income taxes if:
  • Your filing status is single and you made over $12,000 (if you’re under 65 years old) or $13,600 (if you’re over 65 years old)
  • Your filing status is head of household and you made more than $18,000 (if you’re under 65 years old) or $19,600 (if you’re over 65 years old)
  • Your filing status is married filing jointly and you made more than $24,000 (if both spouses are under 65 years old), $25,300 (if one spouse is over 65 years old), or $26,600 (if both spouses are over 65 years old)
  • Your filing status is married filing separately and your income is over $5
  • Your filing status is widower with a dependent child and you made more than $24,000 (if you’re under 65 years old) or $25,300 (if you’re over 65 years old)
• The amount of federal income tax you’re required to pay will depend on which income tax bracket you fall into based on your filing status and earned income
• Payments for federal income taxes will go to the Internal Revenue Service (IRS) not your state’s department

For help on your federal or state taxes, reach out to Community Tax today!

This information is accurate as of 2019. Special circumstances that can affect your tax return may apply.