In my job as a financial advisor, I had a recent conversation with a new client who resides in New Hampshire. He mentioned being a retired U.S. Department of Agriculture employee who had lived in various places throughout his career. He was a native New Hampshirite who decided to return home to retire.
He mentioned during the course of our conversation that the state of New Hampshire has neither a state income tax nor a sales tax. This was surprising to me, as it is usually the case where states that do not have the former at the very least have the latter (e.g. Texas, where I reside).
Can anyone on the board from New Hampshire confirm if this is the case or not? If it is, how does the state government go about raising revenue? Are the property taxes through the roof up there, or is there another means?
From Massachusetts (but just bought land in NH and will be retiring there eventually). He is correct - NH has no sales or income tax. Buying things in NH is a famed pass-time of Bay Staters so we can avoid the sales tax. I won’t get into use tax paid to Massachusetts in lieu of sales tax to NH.
Most of the state’s revenue comes from a tax on business profits. It’s something like an 8% tax, but I honestly don’t know exactly how it works. It’s enough to run most of state government. There are also fees for plenty of things. Tolls on the state’s highways are famous in New England. They also sell alchohol at state-run liquor stores.
Property taxes in NH are what I would consider crazy high, and I am from Mass. But going with the state’s philosophy, property taxes are paid to the municipality, and the municipality (the town’s voters at a Town Meeting or the city council) gets to determine how those funds are spent. Those taxes offset the state aid that many states hand back to municipal governments, so it’s a bit of a wash in the end.
I lived in NH for 20 years, and the main interaction I had with state taxes were local town/city property taxes. There are more and higher fees on things that might be free or less expensive in other states. I never operated a business there so I never saw the business taxes, but I understand that funds a major chunk of state expenses. There are also many more taxes that might not appear in other states.
OK, thanks for the great info. I didn’t think of toll roads; we got more than our share down south as well. I’m getting the impression that to retire to New Hampshire, it might be preferable to rent rather than buy, avoid the highways, and not actively own a business.
Is the state-run liquor store a thing in multiple states in New England? I’ve heard about that before, but I had thought there was only one state left that still did that.
There is no general sales tax or income tax, but some sales and some income are taxed. There is a 5% tax on interest and dividends (first $2400 exempt for most people, first $3600 exempt if over 65). Most sales are tax-free, but there is a sky-high sales tax (9% I think) on hotel rooms, car rentals, restaurant food, and ready-to-eat hot food from grocery stores. There is also a 7% sales tax on telecom services, and the usual range of excise taxes on liquor, tobacco, and motor fuels.
20-year resident and homeowner here (moved back out in 2018).
The above is all correct, but it gets worse. Not only are the property taxes sky high, they love add-ons, like extra taxes for waterfront and even a view tax (I’ve never understood how that isn’t subjective).
My current house in MA is worth three times what my NH house was. The taxes on the NH house were slightly higher.
I had a conversation with governor Hassan once. She acknowledged that the taxes could be really regressive, but that the identity of New Hampshire prevented any rational discussion on the matter.
I loved NH, but much of the low tax claim is a myth.
I lived in New Hampshire during the William Loeb/Mel Thompson days (for those who don’t know the names, that means “about 4 decades ago”). I thought there was a state lottery that was used to fund education, but perhaps this is no longer the case as no one has mentioned it.
It contributes a small amount, but not enough to really change the property tax rates. Since the state doesn’t contribute much to education, towns have wildly varying levels of funding for their schools. As a result, school performance differs greatly from town to town which resulted in a NH Supreme Court case that mandated some leveling of funding to be fair to the students in NH.
It’s not surprising that Alaska has the lowest overall tax burden of any state, but it might surprise you that Delaware is 2nd lowest, and New Hampshire is only 5th lowest, at least according to this.
But tax burden is only one part of cost of living. Mississippi is the least expensive state to live overall, and not surprisingly Hawaii is the most expensive. New Hampshire is right around the average. Massachusetts is the 5th highest.
You don’t think tenants effectively pay the real estate taxes? And when I have driven from Montreal to Boston, there was only one toll road and I don’t recall its having been very costly.