Does NH Have State Income Tax? What You Need to Know
Explore New Hampshire's tax landscape, focusing on income sources and filing requirements for residents and businesses.
New Hampshire presents a unique case in state taxation, particularly regarding income tax. Unlike most states, New Hampshire does not impose a traditional state income tax on wages and salaries, an appealing feature for residents and potential newcomers seeking tax relief.
Wages and Salaries
New Hampshire does not tax wages and salaries, requiring residents to pay only federal income tax. This can result in significant savings, particularly for high earners. However, the state’s high property taxes may offset some of these benefits. Prospective residents should carefully evaluate their overall financial situation, including property ownership, to fully understand the tax implications of living in New Hampshire.
Interest and Dividends
While wages are untaxed, New Hampshire imposes a 5% tax on interest and dividends for individuals earning over $2,400 annually or $4,800 for joint filers. This primarily affects those with substantial investments. Taxpayers can reduce their liabilities by considering non-taxable securities or tax-advantaged accounts like Roth IRAs. Retirees should reassess withdrawal strategies to minimize taxes. Deductions and exemptions for individuals over 65 can further reduce the tax burden.
Business Profits
The Business Profits Tax (BPT) is levied at 7.7% on businesses with gross receipts exceeding $92,000. It applies to corporations, partnerships, and LLCs electing corporate taxation. Businesses must accurately calculate taxable income, deduct allowable expenses, and consider tax credits, such as the Research and Development Credit, to lower liabilities. Companies with over $200 in tax liability must make quarterly estimated payments to avoid penalties. Additionally, the Business Enterprise Tax (BET), at a 0.55% rate on compensation and interest expenses, should be understood in conjunction with the BPT to manage the overall tax burden effectively.
Filing Obligations
Taxpayers subject to the Interest and Dividends Tax must file by April 15, aligning with federal deadlines. Businesses subject to the BPT and BET must file by the 15th day of the third month following their fiscal year-end, typically March 15 for calendar-year businesses. Maintaining accurate records of income, expenses, and deductions is critical for accurate filings and useful in the event of audits or discrepancies.