The interest and dividends tax is a state tax on distributions, dividends, and interest income often accrued from investments.
Any New Hampshire resident who received more than $2,400 per year from any of those categories – or $4,800 per year if filing jointly – must pay the tax.
Eligible income under the tax includes dividends, or earnings distributions sent by companies; and interest, which can encompass any interest payments by banks, credit unions, and trust companies, as well as any personal life insurance interest, personal loans, annuities, and income from trusts, among other areas.
For decades, the tax levied 5 percent of that income. As it was phased out, it dropped to 4 percent for tax year 2023, 3 percent for 2024, and will be zero percent for 2025. That means this coming April, when residents file their 2024 taxes, will be the last time Granite Staters will need to pay the tax.
How many people pay the tax?
Most Granite Staters do not pay the interest and dividends tax, data shows.
About 10 percent of all tax filers in New Hampshire paid the state interest and dividends tax in the 2021 tax year, according to data from state and federal agencies.
There were 73,054 filers of the interest and dividends tax in tax year 2021, and 729,290 filers of federal income tax that same year, noted Phil Sletten, research director at the New Hampshire Fiscal Policy Institute, in an interview.
But that represents the number of filed taxes; not everyone who filed needed to pay the tax. About 7.8 percent of people that year paid something toward the interest and dividends tax.
The number of filers encompasses joint filers and individual filers, so it is difficult to know how many individual people paid the interest and dividends tax. But the comparison gives a sense of scale, Sletten noted.