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State Income Tax in New Hampshire: Everything You Need to Know in 2023

Introduction

New Hampshire is one of the few states in the United States that does not impose a state income tax on its residents. This means that individuals who live and work in New Hampshire are not required to pay any state income tax on their earnings. However, there are still some taxes that residents of New Hampshire have to pay. In this article, we will explore everything you need to know about state income tax in New Hampshire in 2023.

What Taxes Do You Have to Pay in New Hampshire?

While New Hampshire does not have a state income tax, residents of the state still have to pay other types of taxes. For example, New Hampshire has a 5% state sales tax on meals and rentals, and a 9% tax on hotel rooms. Additionally, the state has property taxes, which are collected by local governments and used to fund schools, roads, and other public services.

Why Doesn't New Hampshire Have a State Income Tax?

New Hampshire's lack of a state income tax is often cited as one of the reasons why the state is so attractive to businesses and individuals alike. The absence of a state income tax helps to keep the cost of living in the state relatively low, which can be a major draw for people looking to relocate. Additionally, New Hampshire's lack of a state income tax may help to attract businesses and entrepreneurs who are looking to operate in a tax-friendly environment.

How Does New Hampshire Fund Its Public Services?

Without a state income tax, New Hampshire has had to find other ways to fund its public services. As mentioned earlier, the state relies heavily on property taxes to fund its schools, roads, and other public services. Additionally, the state has a variety of fees and other taxes that are used to generate revenue. For example, New Hampshire charges a fee for vehicle registrations, and it also has a tax on gasoline and diesel fuel.

How Does New Hampshire Compare to Other States?

When it comes to state income tax, New Hampshire is one of just nine states that do not have a state income tax. However, it's worth noting that some of these states, such as Alaska and Florida, have other taxes that residents have to pay. When you consider all of the taxes that residents of each state have to pay, New Hampshire ranks 27th in the country for overall tax burden, according to WalletHub.

What Are the Benefits of Living in a State Without a State Income Tax?

Living in a state without a state income tax can have a number of benefits, particularly for individuals who are looking to save money. Without a state income tax, residents of New Hampshire are able to keep more of their earnings, which can help to offset other taxes and expenses. Additionally, the absence of a state income tax can make it easier for businesses and entrepreneurs to operate in the state.

What Are the Drawbacks of Living in a State Without a State Income Tax?

While there are certainly benefits to living in a state without a state income tax, there are also some drawbacks. For example, New Hampshire's reliance on property taxes to fund public services can be a burden on homeowners, particularly those living in areas with high property values. Additionally, the lack of a state income tax can make it more difficult for the state to fund certain programs and services.

Conclusion

In summary, New Hampshire is one of the few states in the United States that does not have a state income tax. While this can be a major draw for individuals and businesses looking to relocate, it's important to remember that residents of the state still have to pay other types of taxes. Additionally, New Hampshire's reliance on property taxes to fund public services can be a burden on homeowners. Overall, living in a state without a state income tax can have its pros and cons, and it's important to carefully consider all of the factors before making a decision to relocate.

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