New Hampshire: The Northeast's Tax-Free Exception

New Hampshire is the only state in the Northeast with no broad-based income tax and no sales tax. As of January 1, 2025, the state also eliminated its Interest and Dividends Tax, meaning investment income is now fully off the table for state taxation.

What "No Income Tax" Actually Means in 2026

For most of its history, New Hampshire had one asterisk on its no-income-tax status: the Interest and Dividends Tax, which taxed passive income at 3% before it was phased down and finally repealed. That asterisk is gone. A resident earning $70,000 in wages, dividends, or interest owes the state of New Hampshire exactly $0 in income tax.

For comparison, a Massachusetts resident earning the same $70,000 pays a 5% flat income tax, which comes to $3,500 per year. A Connecticut resident at that income level pays roughly $2,900. Moving across the state line from either of those states is an immediate, permanent raise.

New Hampshire Republicans passed a constitutional amendment proposal, CACR 12, that would permanently ban an income tax if voters approve it. The Tax Foundation ranked New Hampshire third in its 2026 State Business Tax Competitiveness Index, citing the absence of both income and sales taxes as the primary drivers.

The Property Tax Reality

Here is the catch that every honest analysis has to address: New Hampshire funds its local government almost entirely through property taxes, and those rates are high.

The statewide average effective property tax rate sits at approximately 1.93% as of late 2025 data. On a $400,000 home, that is $7,720 per year. Individual town rates vary sharply. Claremont has historically carried one of the highest effective rates in the state, near 3.1%, while towns like Rye sit closer to 1.1% due to high assessed values and a smaller tax base per household.

For comparison, Massachusetts carries an effective rate of about 1.12% statewide. So a homeowner moving from Massachusetts to New Hampshire may save $3,500 in income tax but pay an additional $3,200 in property tax on a similarly priced home. The net gain is real but smaller than the headline suggests. The math depends heavily on which New Hampshire town you choose.

New Hampshire has no estate tax and no inheritance tax, which matters significantly for residents with substantial assets. If that is a priority for your planning, see our full breakdown at Estate Tax by State: Where Your Heirs Pay Most.

Is NH Actually Better for Retirees Than Massachusetts?

For retirees, the case for New Hampshire is strong, though not unconditional.

Social Security income is not taxed at the federal level for moderate earners, and New Hampshire imposes no additional state tax on it, ever. Pension income, 401(k) withdrawals, and IRA distributions are also fully exempt from state tax. Massachusetts taxes most retirement income at 5%, including pension income for non-government employees.

The Interest and Dividends Tax repeal is especially meaningful for retirees living off investment portfolios. A retiree drawing $50,000 per year from dividends and capital gains paid $1,500 annually under the old New Hampshire I&D regime. That bill is now zero. For a detailed look at how New Hampshire stacks up against other retirement-friendly states, read our post on the Best States for Retirees to Avoid Taxes.

The tradeoff for retirees is, again, property taxes. A retiree who owns a $500,000 home in a mid-rate New Hampshire town might pay $9,000 or more annually in property taxes. Some towns offer property tax exemptions for residents over 65, but eligibility thresholds vary and relief is limited.

The California and High-Tax State Comparison

For residents fleeing California, New York, or New Jersey, New Hampshire offers a specific combination that Florida and Texas cannot: no income tax plus a genuine Northeast location with four seasons, proximity to Boston, and access to major airports.

A California resident earning $150,000 pays roughly $13,800 in state income tax. In New Hampshire, that bill is $0. Even after accounting for higher property taxes, the annual savings for a high earner relocating from California typically exceed $10,000.

New Hampshire also has no sales tax, which is rare even among no-income-tax states. Texas has a 6.25% base sales tax. Florida sits at 6%. New Hampshire collects nothing. For a full comparison of states without sales taxes, see States With No Sales Tax.

Use our tax calculator to enter your income, home value, and current state to see exactly what you would save or owe by moving to New Hampshire.

Key Takeaways

• A New Hampshire resident earning $70,000 pays $0 in state income tax. A Massachusetts resident at the same income pays $3,500.
• New Hampshire's average effective property tax rate is approximately 1.93%, one of the highest in the country, and it varies dramatically by town.
• The Interest and Dividends Tax repeal, effective January 1, 2025, eliminated the last remaining state tax on passive income, making New Hampshire's tax profile the cleanest in the Northeast.

Compare New Hampshire side by side with any other state using our full data tools at liveordiehere.com.