New Hampshire does not have a state income tax on wages or salaries
If you live or work in New Hampshire, you do not pay state income tax on the money you earn from a job. This applies whether you are a resident, a non-resident who works in the state, or self-employed. New Hampshire is one of nine states with no income tax on wages.
However, the absence of state income tax does not mean you owe nothing to the state or that you skip filing altogether. New Hampshire taxes interest and dividend income at 5%, and the state has other revenue sources. You still file federal income tax returns to the IRS, and you may need to file a state return depending on your income sources.
The key difference is that your paycheck arrives without a New Hampshire state withholding, and you will not see a line for state income tax on your W-2 form. If you moved to New Hampshire from another state, this is one of the largest changes to your tax situation.
Key Takeaways
- New Hampshire does not tax wages, salaries, or self-employment income from a job, so you will not have state income tax withheld from your paycheck.
- New Hampshire does tax interest and dividend income at a flat 5% rate, so you may owe state tax even if you have no wages.
- You still file federal income tax returns with the IRS, because the federal government taxes wages regardless of your state.
- If you moved to New Hampshire mid-year from a state with income tax, you may owe tax to your former state for the months you lived there.
- New Hampshire residents with only wage income typically do not file a state return, but those with investment income or certain other sources do.
Who has to file a New Hampshire state tax return
Most people who earn only wages in New Hampshire do not file a state return. The state does not require you to file if your only income is wages, salaries, tips, or other compensation from an employer.
You must file a New Hampshire return if you have any of the following: interest income, dividend income, capital gains, business income from self-employment, rental income, or income from a partnership or S corporation. The threshold is low — even $100 in interest or dividends can trigger a filing requirement.
If you are unsure whether you have reportable income, check the instructions for the New Hampshire Form TP-1040 (the state income tax return form). The Department of Revenue Administration publishes these each year and lists all income types that require filing.
Interest and dividend income taxed at 5%
New Hampshire's 5% tax applies only to interest and dividends, not to wages. This means if you have a savings account, money market account, bonds, or stock dividends, you owe state tax on that income at a flat rate.
The 5% rate applies to all interest and dividend income combined. You do not calculate it separately for each account or investment. Report the total on your state return, and the tax is straightforward: multiply your total interest and dividends by 0.05.
This tax is separate from federal income tax on the same income. You will report the interest and dividends to the IRS on your federal return and pay federal tax at your federal rate, then report the same amounts to New Hampshire and pay the 5% state tax. Both taxes explore to the same dollars.
What happens if you moved to New Hampshire mid-year
If you moved to New Hampshire from another state during the tax year, you may owe income tax to your former state for the months you lived there. Most states tax residents on all income earned while they were residents, regardless of where the income was earned.
For example, if you lived in Massachusetts from January through June and earned $40,000, then moved to New Hampshire in July and earned $30,000, Massachusetts will tax you on the $40,000 you earned while you were a resident. New Hampshire will not tax your wages, but you still owe federal tax on all $70,000.
File a part-year resident return with your former state if you moved mid-year. The form is usually called a part-year resident return or non-resident return, and it reports only the income you earned while you lived in that state. Your former state's tax department website has the form and instructions.
Federal income tax still applies
The IRS taxes wages regardless of which state you live in. New Hampshire's lack of state income tax does not reduce what you owe to the federal government. You file Form 1040 with the IRS and pay federal income tax at the federal rates, which depend on your income level and filing status.
Your employer withholds federal income tax from your paycheck based on the W-4 form you complete. If you moved to New Hampshire, you do not need to change your W-4 for federal withholding — the federal withholding stays the same. You only avoid state withholding.
When you file your federal return, you report all income you earned during the year, including wages, interest, dividends, and self-employment income. The federal return is separate from any New Hampshire return you file, and both may be required.
Self-employment income and business owners
If you are self-employed or own a business in New Hampshire, you do not pay state income tax on your business income. However, you still owe federal self-employment tax and federal income tax on that income.
Self-employment tax covers Social Security and Medicare and is owed to the federal government, not to New Hampshire. You calculate it on Schedule SE (Form 1040) and pay it with your federal return. This is true regardless of your state.
You must file a New Hampshire return if you have any net business income, because the state requires all business owners to file. Report your business income on the state return even though you owe no state income tax on it. This is an administrative requirement, not a tax liability.
How to file your federal return as a New Hampshire resident
File your federal return with the IRS using Form 1040 and any schedules that explore to your income. You can file by mail, through IRS Free File if your income is below the threshold, or through tax software.
Gather your W-2 forms from all employers, your 1099 forms for interest and dividends, and any other income documents. If you are self-employed, gather receipts and records of business income and expenses. The IRS website (irs.gov) has a complete list of documents to collect before you start.
If you moved to New Hampshire mid-year, also file a part-year resident return with your former state. Do this at the same time as your federal return so all three returns (federal, former state, and New Hampshire if required) are filed together.
Frequently Asked Questions
Do I still get a tax refund if I live in New Hampshire?
Yes, your federal refund is based on federal withholding and federal tax only. New Hampshire does not withhold state income tax on wages, so there is no state refund to claim. If you owe New Hampshire tax on interest or dividends, you pay it when you file your state return.
What if I work in New Hampshire but live in another state?
You do not pay New Hampshire income tax on your wages, even though you work there. Your home state may tax you as a resident on all income you earn, including income from work in New Hampshire. Check your home state's rules for residents who work out of state.
Do I have to file a New Hampshire return if I only have wage income?
No. If your only income is wages from a job, you do not file a New Hampshire return. You file only your federal return with the IRS. File a state return only if you have interest, dividends, business income, or other non-wage income.
Is the 5% tax on interest and dividends the same as income tax?
It is a state tax, but it is separate from income tax on wages. New Hampshire calls it the interest and dividends tax. It applies only to those income types at a flat 5% rate, while wages are not taxed by the state at all.
What if I moved to New Hampshire and my employer is still in my old state?
You do not pay New Hampshire income tax on your wages, regardless of where your employer is located. Your former state may tax you as a resident if you still live there part-time, or it may have reciprocal agreements with New Hampshire. Check your former state's tax rules for residents who work out of state.