New bill would make New Hampshire truly income-tax free

New bill would make New Hampshire truly income-tax free

House Bill 568 would help fixed income seniors and keep more investors in-state.

A bill being considered by the New Hampshire legislature would make the state truly income-tax free, phasing out the interest and dividends tax.

House Bill 568 would increase exemptions to the I&D tax before repealing the tax entirely in 2025 – returning more than $109 million to New Hampshire taxpayers over the lift of the phaseout.

“After such a tumultuous and uncertain year, now is not the time to be raising taxes on the people of our state and on our small businesses, which is why we are cutting them,” New Hampshire Gov. Chris Sununu said.

Granite Staters often pride themselves on the “New Hampshire Advantage” – with no state income tax and no sales tax – but this ignores the I&D tax, which takes millions of dollars from Granite Staters each year who rely on returns from their investments. The current I&D tax exempts up to $2,400 per year for one person, and $4,800 for a couple. Any returns beyond that level are taxed at 5%. HB 568 would increase the exemptions for three years and eliminate the tax in the fourth.

“We have been holding ourselves out for a very long time as having no personal income tax, but the truth is we do have one, and it’s the interest and dividends tax,” said the bill’s chief sponsor, state Rep. Norm Silber.

Eight states have no income tax of any kind: Alaska, Florida, Nevada, South Dakota, Texas, Washington, Wyoming and Tennessee, which completed its own repeal of a tax on interest and dividends on Jan. 1, 2021.

New Hampshire should follow Tennessee’s lead and remove the asterisk from its no-income-tax title.

Not only does the I&D tax harm seniors on fixed incomes, it makes New Hampshire a less attractive state to save money and invest long-term – costing Granite Staters meaningful job opportunities.

In New Hampshire Business Review reporting, Dan McGuire, a board member of the Granite State Taxpayers Association, called the I&D tax problematic. It’s “the most disruptive tax in our economy because it is a tax on savings, and saving creates capital,” he said. “That’s how the economy gets better every year.” Indeed, one reason Tennessee repealed its interest and dividends tax was that the revenue it brought in for the state wasn’t even enough to cover the economic and administrative cost of collecting it in the first place, according to the Tax Foundation.

Granite Staters are proud to live in a state that doesn’t take a cut of their neighbor’s paycheck.

They should be proud to live in a state that doesn’t eat away at their neighbor’s investments, either.

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