The NH Interest and Dividends Tax Phase-Out and Repeal
Understand your remaining obligations for New Hampshire's Interest & Dividends tax as it is phased out, leading to its complete elimination in 2025.
New Hampshire’s Interest and Dividends (I&D) Tax on investment income is being eliminated. For decades, this tax on interest and dividends applied to residents, including individuals, partnerships, and LLCs. Recent legislation initiated a gradual, multi-year phase-out of the tax rate, which will culminate in its complete repeal.
The Phase-Out Schedule and Tax Rates
The repeal of the Interest and Dividends Tax was set in motion by House Bill 2. For many years, the I&D tax rate was 5%, and the legislation established a schedule for reducing the rate annually. The rate was lowered to 4% for taxable periods ending on or after December 31, 2023, and is 3% for taxable periods ending on or after December 31, 2024.
The tax is fully repealed for all tax periods beginning on or after January 1, 2025. The New Hampshire Department of Revenue Administration (NHDRA) retains the authority to audit and collect taxes for periods before the repeal date.
Determining Your Taxable Income
To understand your obligations, you must first identify what income is subject to the tax. The I&D tax applies to gross interest and dividend income received from all sources. This includes interest from bonds and bank accounts, as well as dividends from corporate stock.
The tax law provides several exemptions that reduce the amount of income subject to taxation. A standard exemption of $2,400 is available to all filers, and this amount doubles to $4,800 for those filing a joint return. These exemptions are applied to your total interest and dividend income to determine your taxable base.
Beyond the standard exemption, additional amounts are available for certain individuals. Taxpayers who are 65 years of age or older can claim an extra $1,200 exemption. This same additional exemption is also available to individuals who are blind or to those under 65 who are unable to work due to a disability.
Filing Obligations Until Repeal
Filing requirements remain in place for the final tax years. A taxpayer must file an Interest and Dividends Tax return, Form DP-10, if their gross interest and dividend income exceeds the standard exemption amounts. This means an individual must file if their income is over $2,400, or $4,800 for joint filers.
If a filer expects to owe more than $500 in I&D tax for the year, they are generally required to make quarterly estimated payments. This ensures that the tax liability is paid gradually rather than in a single lump sum.
With the tax fully repealed starting in 2025, taxpayers should not make any estimated tax payments for the 2025 tax year. The NHDRA has indicated that any 2025 estimated payments made in error should be requested for a refund in writing. For the final 2024 filing season, any overpayments of the tax will be refunded, unless there is an outstanding balance due from a prior year.