No income tax in New Hampshire: the end of the Interest and Dividends Tax, and what the state takes instead

For the 2026 tax year a New Hampshire resident files a federal Form 1040 and nothing with the state. Wages, pensions, IRA withdrawals, Social Security and capital gains were never taxed here. The one tax that did reach personal income, the Interest and Dividends Tax, applied to dividends and interest above $2,400 a year ($4,800 on a joint return) and was repealed for taxable periods beginning after December 31, 2024; the 2024 return, filed by April 15, 2025 at 3%, was the last one. What replaces all of that is the property tax, which funds the town, the county and the state’s share of the schools, and a short list of taxes that are paid without a return: 8.5% on meals, rooms and car rentals, 7% on phone service, and $0.75 per $100 from each side of a real estate sale. A household that runs a business on Schedule C, E or F has one more: the Business Profits Tax, 7.5% of the profit after a deduction for the owner’s own labor, once gross business income exceeds $109,000.

The sums are not small; they are collected differently. A couple who buy a $450,000 house pay $3,375 of transfer tax at closing and then a property tax bill in the range of $9,000 a year in a town with a $20 rate, more in some towns and less in others. The same couple pay no sales tax on the car they buy the next month, no tax on the dividends from their brokerage account, and no tax on the pension that arrives every month. The rest of this article walks through each piece: what ended, what is left, and which of it reaches the federal return.

The Interest and Dividends Tax, and how it ended

From 1923 until the 2024 tax year, New Hampshire taxed a resident’s interest and dividend income above an exemption of $2,400, or $4,800 on a joint return, with another $1,200 of exemption for a filer who was 65 or older, blind, or disabled and unable to work. The rate was 5% for decades. A 2021 phase-out cut it to 4% for taxable periods ending on or after December 31, 2023 and 3% for periods ending on or after December 31, 2024, and a 2023 law then repealed the tax outright for taxable periods beginning after December 31, 2024. The return was Form DP-10, due on the 15th day of the fourth month after the year ended, which for a calendar-year filer meant April 15.

Interest and dividends inside an IRA, a 401(k) or a pension were never reached; the tax applied to taxable accounts. A filer 65 or older had a $3,600 exemption rather than $2,400.

Repeal is not amnesty. The Department of Revenue Administration said so plainly when the repeal took effect: taxable periods beginning on or before December 31, 2024 remain subject to audit and collection, a 2024 return that was never filed is still due with interest and penalties, and no 2025 estimated payments should have been made. The Department issued no 2025 forms. Anyone who sent a 2025 estimate in error can ask for it back in writing. A state tax amnesty ran from December 1, 2025 through February 15, 2026 for taxes due on or before June 30, 2025, waiving penalties and cutting interest in half; it covered old DP-10 returns and it has closed. A late 2024 or earlier return now carries the full charges.

Two practical results for 2026. A brokerage 1099 for a New Hampshire resident has no state consequence at all; the dividends and interest go on the federal Schedule B and nowhere else. And a custodian or employer that still shows New Hampshire state withholding on a 1099 or W-2 has made an error, because there is nothing to withhold for.

The property tax: the town, the county and the state school tax in one bill

The property tax is what New Hampshire runs on. Each town assesses property as of April 1 and sets a rate expressed in dollars per $1,000 of assessed value, with the Department certifying the rate each fall. The bill is one bill, but it has four parts: the town, the local school district, the county, and the Statewide Education Property Tax, a uniform rate the Department sets so that it raises a fixed sum statewide, $363 million in the Department’s recent presentations to the Legislature. The state portion is assessed and collected by the town like everything else, which is why most homeowners never notice it is there. It matters for one reason: the state’s own relief program, described below, refunds part of that state portion to lower-income homeowners.

Rates vary a great deal from town to town, because the tax base and the school budget vary. An illustrative rate of $20 per $1,000 on a $450,000 assessment produces a $9,000 bill. Most towns bill twice a year, in the summer and again in the late fall or December once the rate is set. For the federal return, the deduction is for what was paid in the calendar year. The relief that exists, the elderly exemption, the veterans’ credit, the disabled and blind exemptions, the deferral, and the state’s Low and Moderate Income Homeowners Property Tax Relief, is covered in Property tax relief in New Hampshire.

On Schedule A, the property tax is nearly the whole SALT line for a New Hampshire itemizer. There is no state income tax to deduct and no general sales tax to elect in its place. The one addition is the town’s motor vehicle registration permit fee, the larger of the two charges when a car is registered, which is figured on the vehicle’s list price and age and is a deductible personal property tax. The federal cap, $40,400 for 2026, is rarely reached. The more common outcome is that property tax alone does not get a household past the standard deduction, $16,100 single and $32,200 joint for 2026, and the household does not itemize.

No sales tax, but three taxes paid without a return

Meals and Rooms (Rentals) Tax, 8.5%. Charged on restaurant meals, prepared food, hotel and short-term lodging, and motor vehicle rentals, and on beer, wine and liquor served at a restaurant whether or not food is served. The rate dropped from 9% to 8.5% on October 1, 2021 and has stayed there. The restaurant or innkeeper collects it and files; the customer sees it on the check. A homeowner who rents a lake house for the summer weeks is an operator for this tax and has to register and collect it.

Communications Services Tax, 7%. On two-way communications services, which in practice means the phone bill, landline and mobile. The carrier collects it.

Real Estate Transfer Tax, $0.75 per $100. Paid by both the buyer and the seller, each at $0.75 per $100 of the price, so $15 per $1,000 changes hands in total on a sale; where the consideration is $4,000 or less, each side pays a $20 minimum. The buyer and seller each file a Declaration of Consideration, Form CD-57-P or CD-57-S, with the Department within 30 days after the deed is recorded, along with the Inventory of Property Transfer, Form PA-34. The tax is paid by buying stamps from the register of deeds, which the register affixes to the deed. Gifts, transfers between spouses under a divorce decree, corrective deeds, inheritances and transfers to a town or the state are exempt. The federal return does not treat this as a deductible tax: the buyer’s half is added to the cost of the house, and the seller’s half reduces the amount realized on the sale.

The business taxes a household can meet

The nearest thing New Hampshire has to an income tax on individuals is the Business Profits Tax, and it reaches more households than its name suggests. Any Schedule C business, Schedule F farm or Schedule E rental operation with gross business income from all activities above $109,000 for a taxable period beginning on or after January 1, 2025 must file, and the threshold is adjusted for inflation every two years, so the figure the Department publishes for 2027 is to come. The rate is 7.5%. A proprietor files Form NH-1040 with the Business Tax Summary, Form BT-Summary, attaching the federal Schedules C, D, E, F, 4797 and 6252 that apply, due on the 15th day of the fourth month after the year ends, April 15, 2027 for calendar-year 2026. Filing and payment run through the Department’s portal, Granite Tax Connect.

The deduction that makes the tax bearable for a one-person business is the one for the owner’s own compensation under RSA 77-A:4, III: a proprietor may deduct the reasonable value of personal services actually rendered to the business, and the Department does not demand contemporaneous records to support a deduction of up to $75,000 (verify). A consultant with $150,000 of gross receipts and $110,000 of Schedule C profit who deducts $75,000 of compensation owes 7.5% on $35,000, or $2,625. Above $75,000 the deduction has to be supported as what the owner could have earned doing the same work for someone else. Estimated payments, 25% each on the 15th day of the fourth, sixth, ninth and twelfth months, are required once the year’s tax exceeds $200; a first-year filer can ask for relief from the underpayment penalty on Form DP-2210/2220.

The Business Enterprise Tax is the second layer: 0.55% of the enterprise value tax base, which is the compensation, interest and dividends the business pays out, for a business with gross receipts or a tax base over $298,000. Most sole proprietors are under it. The BET paid is a credit against the Business Profits Tax, carried forward ten taxable periods if unused, so a business that owes both does not pay both in full. House Bill 155 (2026) raises the BET filing threshold to $400,000 for tax years beginning on or after January 1, 2027, moves the next inflation adjustment to 2029, and sets up an automatic cut in the BET rate of 0.05 percentage point for each full $100 million of certified business tax surplus, with a floor of 0.25% (verify enactment and chapter number).

One warning for a proprietor who files both a federal Schedule C and an NH-1040. The Department has said that New Hampshire is a static-conformity state tied to the Internal Revenue Code as it stood on December 31, 2018, and that it has not adopted the 2025 federal tax law (verify). The permanent 100% bonus depreciation, the restored expensing of research costs and the higher Section 179 limit on the 2026 federal Schedule C do not carry onto the New Hampshire return; New Hampshire has long required its own depreciation adjustments, and the Department’s forms walk through them. The federal profit and the New Hampshire profit for the same business will differ.