New Hampshire has no state withholding tax on wages. The state does not tax salaries, hourly pay, tips, or other earned compensation, so employers in New Hampshire withhold no state income tax from employee paychecks and the Department of Revenue Administration issues no state W-4 equivalent.1NH Department of Revenue Administration. Interest and Dividends Tax As of January 1, 2025, the state also repealed its last remaining personal tax on investment income, leaving New Hampshire with zero personal income taxation.
Employees moving from Massachusetts or Vermont often notice the difference on their first pay stub. There is no state line item, no annual state return tied to wages, no state refund, and no state estimated payments on earned income. For small employers, the compliance savings are real: payroll systems do not track New Hampshire wage brackets because none exist.
What Still Comes Out of a New Hampshire Paycheck
Federal obligations apply the same way they do everywhere else. Employers withhold federal income tax based on each employee’s IRS Form W-4, plus the employee’s share of Social Security at 6.2% and Medicare at 1.45%. Wages above $200,000 pick up an additional 0.9% Medicare surtax. Those deductions appear on every New Hampshire pay stub.
Employers carry their own costs on top. They match the 6.2% Social Security and 1.45% Medicare contributions, and they pay into the state unemployment insurance system through New Hampshire Employment Security. New employers start at a 2.7% contribution rate applied to the first $14,000 of annual wages per employee, with the rate later adjusted based on claims experience.2NH Employment Security. Employer Claims and Taxes Unemployment contributions are employer-only and do not reduce take-home pay.
The Interest and Dividends Tax Is No Longer in Effect
For decades, the one exception to New Hampshire’s no-income-tax reputation was a tax on interest and dividend income under RSA 77. That exception is gone. The Interest and Dividends Tax was repealed effective January 1, 2025, after a phased reduction that brought the rate from 5% to 3% over two years.3NH Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect House Bill 2, signed by Governor Sununu in the 2023 session, set the repeal date.
Starting with the 2025 tax year, no Interest and Dividends Tax returns are required, no estimated payments should be filed, and the state will not publish new I&D tax forms.3NH Department of Revenue Administration. Repeal of NH Interest and Dividends Tax Now in Effect If you previously filed Form DP-10 for interest from savings accounts, bonds, or stock dividends, that obligation has ended. Anyone who filed a 2024 return at the 3% rate and believes they overpaid should contact the Department of Revenue Administration about a refund. Records from prior years should be kept for at least three years from the due date of the return or the date filed, whichever is later.4Legal Information Institute. NH Admin Code Rev 2906.12 – Time Period for Record Retention
Business Owners Still Owe State-Level Tax
No personal income tax does not mean no state tax on your business. Two entity-level levies apply to businesses operating in New Hampshire: the Business Profits Tax under RSA 77-A and the Business Enterprise Tax under RSA 77-E. Sole proprietors and LLC members sometimes assume they escape state tax entirely, and that is not correct once revenue crosses the filing thresholds.
Business Profits Tax
The Business Profits Tax applies at 7.5% on the net income of a business operating in the state.5NH Department of Revenue Administration. Business Taxes For the 2026 tax year, every business organization with gross business income above $109,000 must file.6NH Department of Revenue Administration. NH Department of Revenue Administration Shares Tax Tips and Filing Guidance The threshold is adjusted biennially based on the Consumer Price Index for the Northeast Region, which is why it has moved up from the statutory base of $92,000.7New Hampshire General Court. New Hampshire Code 77-A:6 – Returns Corporations, partnerships, LLCs, and sole proprietorships all fall under it.
Business Enterprise Tax
The Business Enterprise Tax runs at 0.55% on an enterprise value tax base that generally includes compensation paid, interest paid, and dividends paid. For taxable periods beginning on or after January 1, 2025, every business enterprise with more than $298,000 in gross receipts, or an enterprise value tax base above $298,000, must file a BET return.5NH Department of Revenue Administration. Business Taxes
The two taxes interact. BET paid can be credited against BPT liability, and unused BET credits carry forward for up to ten taxable periods.5NH Department of Revenue Administration. Business Taxes In practice many businesses end up paying the larger of the two rather than both in full. A late return triggers a penalty of 5% of the tax due per month, capped at 25% of the total owed.8New Hampshire General Court. New Hampshire Code 21-J:31
Remote Work for Out-of-State Employers
The one scenario where a New Hampshire resident may see state income tax withheld from a paycheck is remote work for an employer based in a state that enforces a “convenience of the employer” rule. That rule lets the employer’s home state tax a remote worker’s income even when the work is performed entirely from another state. As of early 2025, the states applying some version of the rule include New York, Connecticut, Delaware, Nebraska, New Jersey, Oregon, Pennsylvania, and Alabama. New York’s version is the most aggressive and the most likely to reach New Hampshire residents.
New Hampshire has passed legislation declaring that income earned by its residents for work performed entirely within the state cannot be subject to another state’s personal income tax. The practical reach of that law is limited. New Hampshire cannot force another state to stop enforcing its own tax code, and the U.S. Supreme Court has declined to hear challenges to the convenience-of-the-employer rule.
If you live in New Hampshire and work remotely for an employer in one of those states, the employer may still withhold that state’s income tax from your paycheck. You may need to file a nonresident return and pursue a refund. Getting advice from a tax professional before accepting remote work for an out-of-state employer is worthwhile.