New Hampshire to End Interest and Dividends Tax: What Are the Economic Implications

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Written By Blue & Gold NLR Team

 

 

The end of New Hampshire’s Interest and Dividends Tax, set to take effect on January 1, 2025, is causing significant debate among state lawmakers and residents. Republican leaders, including House Speaker Sherm Packard, are celebrating the tax’s elimination, positioning New Hampshire as one of the only states with no personal income or general sales tax, alongside Alaska.

The move is seen as a victory for fiscal discipline and is expected to benefit wealthier households, as the tax primarily affected the top 1% of earners.

Critics, particularly Democratic leaders, argue that the tax repeal will exacerbate funding gaps in the state’s upcoming budget.

They express concerns that the loss of $184 million in revenue from the tax will shift the burden of funding public services onto property taxpayers, who already face the highest property taxes in the nation.

They question how the state plans to cover costs for essential programs, such as those related to juvenile abuse settlements and education funding.

While some groups, such as Americans for Prosperity, argue that the tax was detrimental to New Hampshire’s economic competitiveness, especially in retaining wealthy investors, others, including the New Hampshire Fiscal Policy Institute, emphasize that the tax elimination disproportionately benefits the wealthy, while middle-class and lower-income residents face increasing living costs.

The debate reflects broader concerns about tax policy, state spending, and the distribution of financial benefits in New Hampshire, with both sides anticipating significant challenges in balancing the state budget after the tax’s elimination.

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