New Hampshire will be Completely Free of any Income Tax on January 1, 2025.
Strong state revenues over several budgets made it time to eliminate the interest and dividends tax.
That was the plan, until Democrats proposed HB1492 to reinstate the I&D tax at 5% on January 1st.
GST Board member NH Representative Pat Abrami commented as follows:
“We opposed HB1492, and House Ways and Means Committee voted 20-0 to send it to interim study.
In the second session year this politely killed the bill, which was sponsored by a committee member.
The end of HB1492 means that the interest and dividends tax will be eliminated January 1, 2025!”
Representative Abrami provided the recent history of the interest and dividends (I&D) tax as follows:
Up until 2021 statutes called for this tax to be assessed on interest and dividends at a rate of 5%.
There was a $2,400 exemption for individuals or $4,800 for married couples filing jointly.
Additional $1,200 exemptions applied to those 65 or older and if disabled and if blind.
In 2021 Republicans passed a complete phase out of the interest and dividends tax over five years.
They passed these tax rates: 2022 5%, 2023 4%, 2024 3%, 2025 2%, 2026 1%, 2027 and beyond 0%.
In 2023 Republicans accelerated the phase out: 2022 5%, 2023 4%, 2024 3%, 2025 and beyond 0%.
In both the 2021 and 2023 legislation, there were no changes in the exemptions that could be taken.
HB1492 would have undone the phase out and increase the rate in 2025 and beyond back up to 5%.
The demise of HB1492 means that:
– People moving to “tax-free” New Hampshire will no longer be surprised and disappointed that there actually was an income tax on the interest and dividends portion of their income.
– Investors will be more inclined to move to, and invest in, New Hampshire, spurring business growth.
– Ending interest and dividend tax will help retain retired individuals and couples of all income levels.
– Businesses that had paid I&D taxes will have more funds to invest, improving the business environment.
– Taxpayers who anticipated the elimination of this tax avoided a Democrat bait and switch.
Thanks to the hard work of Republicans, New Hampshire will soon truly be a “No Income Tax” State.
Posted by Patrick Abrami, GST Board Member