New Hampshire pays for state government without a broad personal income tax on wages and without a general sales tax. So how does New Hampshire make money without an income tax? It runs on two business-level taxes that stand in for a corporate income tax, an 8.5 percent meals and rentals tax aimed at tourism, some of the highest property taxes in the country including a statewide education levy, profits from state-run liquor stores, lottery and sports betting proceeds dedicated to schools, a real estate transfer tax paid by both sides of every sale, targeted excise taxes on tobacco, fuel, and communications, and roughly $2.6 billion a year in federal funding. As of January 1, 2025, the state also repealed its last narrow form of personal income taxation, the Interest and Dividends Tax.
Business Taxes Stand In For A Corporate Income Tax
New Hampshire’s two business levies together form one of its largest homegrown revenue streams. The Business Profits Tax under RSA 77-A applies a 7.5 percent rate to net income earned from business activity in the state.1New Hampshire General Court. New Hampshire Code Title V Chapter 77-A – Section 77-A:3 Apportionment Any business organization with gross income above $109,000 must file a return, a threshold raised from $103,000 for taxable periods beginning on or after January 1, 2025.2NH Department of Revenue Administration. Business Profits Tax
The Business Enterprise Tax under RSA 77-E works differently. Rather than targeting profit, it applies a 0.55 percent rate to the enterprise value tax base, which is the sum of compensation paid to employees, interest paid, and dividends distributed.3New Hampshire General Court. New Hampshire Code Title V Chapter 77-E – Section 77-E:1 Definitions The filing threshold is $298,000 in gross receipts or enterprise value tax base, adjusted biennially.4NH Department of Revenue Administration. Business Taxes A company that breaks even or posts a loss still contributes based on its payroll and financial footprint. The BET acts as a floor under business tax revenue; the BPT rises and falls with the economy.
Property Taxes Carry Most Of The Load
The absence of income and sales taxes comes with a trade-off residents feel every year. New Hampshire’s effective property tax rate on owner-occupied housing runs about 1.41 percent, among the six highest in the country. Local property taxes fund most of what a town does: police, fire, roads, and especially schools. Because the legislature sends relatively little money down from Concord, cities and towns shoulder more of the burden themselves.
One piece of the bill is a state tax. The Statewide Education Property Tax, or SWEPT, imposes a uniform rate on all property in New Hampshire, calculated against each municipality’s total assessed value, with the proceeds directed to public education. Local collectors bill SWEPT alongside municipal property taxes, so most homeowners see a single bill.
The Meals And Rentals Tax Captures Tourism
Under RSA 78-A, an 8.5 percent tax applies to prepared meals, short-term room rentals, and motor vehicle rentals.5New Hampshire General Court. New Hampshire Code Title V Chapter 78-A – Section 78-A:6 Imposition of Tax It is the closest thing the state has to a sales tax, but it only hits specific hospitality purchases rather than retail goods across the board. Hotels, restaurants, and car rental agencies collect the tax at the point of sale and remit it to the Department of Revenue Administration. The system pulls revenue from the visitors who fill ski resorts, lake towns, and fall foliage routes each year without those visitors ever being New Hampshire taxpayers.
The State Runs The Liquor Stores
New Hampshire is a control state. The government holds a monopoly on the sale of distilled spirits, and the New Hampshire Liquor Commission, established under RSA 176, manages both retail and wholesale distribution through a network of state-run stores.6Justia. New Hampshire Code Title XIII Chapter 176 – The Liquor Commission The large outlets at Interstate 93 rest stops are state operations designed to attract cross-border shoppers from Massachusetts and other neighboring states with higher alcohol prices. After inventory, employee costs, and store operations, the remaining profit flows into the General Fund. The state earns retail margins on every bottle sold rather than simply taxing a private industry.
Lottery And Sports Betting Fund Schools
The New Hampshire Lottery has dedicated its proceeds to public education since its creation. Under RSA 284, the commission is directed to structure its games in whatever manner yields the largest net revenue for public schools.7New Hampshire General Court. New Hampshire Code Title XXIV Chapter 284 – Section 284:21-i Administrative and Rulemaking Provisions
Sports betting is the fastest-growing piece. New Hampshire launched legal sports wagering on December 30, 2019, with DraftKings as the exclusive digital operator. In fiscal year 2025, players placed more than 27 million wagers totaling over $815 million, generating a record $39 million for public education. Since launch, sports betting has delivered more than $153 million to the state’s education fund.8NH Lottery. NH Sports Betting Delivers Record-Breaking $39 Million to Education in Fiscal Year 2025
Real Estate Transfer Tax
Every time real property changes hands in New Hampshire, both the buyer and the seller owe a transfer tax. Under RSA 78-B, the rate is $0.75 per $100 of the sale price, imposed on each party separately.9New Hampshire General Court. New Hampshire Code Title V Chapter 78-B – Section 78-B:1 Transfer Tax That works out to a combined effective rate of $1.50 per $100, or 1.5 percent, split evenly. On a $400,000 sale, each side pays $3,000. For transactions of $4,000 or less, a minimum tax of $20 applies. In an active real estate market, receipts have become a reliable contributor to General Fund revenue.
Excise Taxes On Specific Products
Tobacco
Under RSA 78, New Hampshire imposes a tax of $1.78 on every pack of 20 cigarettes, with a proportional rate for other package sizes.10New Hampshire General Court. New Hampshire Code Title V Chapter 78 – Section 78:2 Tax Imposed The tobacco tax generates an estimated $156 million a year at current sales volumes. Electronic cigarettes are also taxed, though the take is far smaller.
Communications Services
A 7 percent tax applies to intrastate communications services purchased by consumers in New Hampshire, covering telephone services originating and terminating within the state.11New Hampshire General Court. New Hampshire Code Title V Chapter 82-A – Section 82-A:3 Imposition of Tax; Intrastate Communications Services Federal constitutional limits prevent the state from taxing certain interstate or federally exempt communications.
Motor Fuel Road Toll
New Hampshire calls its gas tax a road toll. The base statutory rate under RSA 260:32 is $0.18 per gallon, with a periodic adjustment mechanism that brings the effective rate higher.12New Hampshire General Court. New Hampshire Code Title XXI Chapter 260 – Section 260:32 Levy of Road Toll As of 2025, the all-in rate was roughly $0.30 per gallon. Fuel tax collections are constitutionally dedicated to the Highway Fund and can only be spent on road construction, maintenance, and related transportation infrastructure.13New Hampshire General Court. New Hampshire Code Title XXI Chapter 260 – Section 260:31 Purpose of Subdivision
Federal Funding Is The Single Largest Source
For all its emphasis on self-reliance, New Hampshire depends heavily on federal money. In the fiscal year 2026 budget, federal funds account for an estimated $2.61 billion, roughly 31.9 percent of the state’s total $8.2 billion budget. That makes the federal government the single largest revenue source by category, exceeding any individual state tax. These dollars are restricted: Medicaid, highway construction, social services, and education grants each flow through separate channels with their own rules, and state agencies must meet federal compliance requirements to keep the money coming.14NH.gov. Where The Money Comes From | TransparentNH
The End Of The Interest And Dividends Tax
Until recently, New Hampshire did impose one narrow form of personal income taxation. The Interest and Dividends Tax under RSA 77 applied to individuals whose annual interest and dividend income exceeded $2,400, or $4,800 for joint filers, at a rate that started at 5 percent and was gradually reduced.15New Hampshire General Court. New Hampshire Code Title V Chapter 77 – Section 77:3 Who Taxable In 2021, the legislature passed a phase-out originally scheduled to end the tax after December 31, 2026. Two years later, lawmakers accelerated the timeline, and the tax was fully repealed effective January 1, 2025.16NH Department of Revenue Administration. Interest and Dividends Tax Repealed Effective January 1, 2025 The repeal closed the last window of personal income taxation in the state. It also puts more pressure on the remaining sources, particularly business taxes and the meals and rentals tax, to keep pace with spending.