Because each state is governed by its own set of laws and regulations, it’s imperative to understand them if you’re in charge of employee payroll. Although professionals services, such as those of abcPayroll, can help relieve the stresses, it’s still good to understand the legal expectations. This article will cover the basics of understanding income tax in NH.
NH Income Tax
Simply stated, there is no income tax in NH. Most states implement a personal income tax based on an individual’s earned income, as reported on your W2. However, New Hampshire is one of the few that by-passes this tax and implements it elsewhere.
The History Behind the Idea
Similarly, the state has no sales tax. These two facts have many people wondering, why? Being the only state that has neither sales or income tax, NH has gained much attention. Click here for information on the beginning of this state of mind and the pledge that many state representatives take vowing to honor the state’s belief.
One of the taxable areas that the State of New Hampshire does consider is interest earned. This interest can be from taxable investments and savings. If you’re not sure about whether or not you need to file your earned interest, don’t worry. The holding company will issue and send a 1099-DIV statement at the end of the year. However, the stated amount only needs to be reported from those earning more than $2,400 annually. Be sure to check with your local accountant for other possible exemptions.
Sources of Income
Although many states heavily rely on income and sales tax as sources of state revenue, New Hampshire has placed the emphasis elsewhere. For example, the roughly eighty liquor stores across the state borders are the only source of liquor throughout the state. These stores provide over 150 million dollars each year to the states General Fund. This fund is used for programs and services such as; education, public safety, and health and social services.
Another heavily taxed, and heavily successful source of revenue for the state is property taxes. With some of the highest rates in the country, New Hampshire residents can expect to pay an average of 2.5%. This is the second-highest in the nation, ranking only behind the state of New Jersey.
For more information on NH income tax and what you need to know as an employer, contact abc Payroll. Our team of experts can assist with complicated tax situations. Visit us online or give us a call today at (978) 251-3003.