Powell: Is Retiring in New Hampshire Really "Tax-Free"?

New Hampshire’s tax appeal comes with a practical question: How much will you keep after paying the costs of living there?

Jim Guarino, a managing director with Baker Newman Noyes in Woburn, Massachusetts, and a member of the American Institute of CPAs’ PFP Champions Task Force, said retirees should weigh savings on income, sales and estate taxes against property taxes, winter expenses and transportation needs.

Guarino also discussed the state’s elimination of its interest and dividends tax in 2025 and why access to medical care belongs in the same conversation as taxes. Below is a transcript of the interview with Jim Guarino, edited for brevity and clarity.

What makes New Hampshire attractive for retirement taxes?

Bob Powell, CFP, RMA: Let’s begin with income. What should retirees know?

Jim Guarino: There are some very compelling tax reasons to consider New Hampshire for retirement. People think of New Hampshire as being a no-tax state in terms of income taxes, sales taxes and estate taxes.

For a retiree, that’s going to include IRA distributions, required minimum distributions, pensions and, if you happen to be working part time, your earned income as well. There’s no income tax on those forms of retirement income. Social Security falls into that category as well.

Also read: Heating oil prices will break the bank in the Northeast this winter

The other attractive feature that folks may not pay as much attention to is that there’s no sales tax on retail goods, food and clothing. When you think about your daily outlay of expenses, there’s not that additional sales tax added to your cost of living for consumables.

For folks who have a considerable estate, New Hampshire does not have an estate or inheritance tax at the state level.

I was joking with one of my colleagues that New Hampshire’s state motto is “Live Free or Die.” You could almost say, “Live almost tax free and retire.”

New Hampshire doesn’t have an income tax, but property taxes are steep.

Sanghwan Kim / Getty Images

How can property taxes offset those savings?

Powell: Somewhere along the line, there has to be a gotcha.

Guarino: Absolutely. Here’s the offset to all the good news: New Hampshire has to generate revenue, and the way New Hampshire does it is in the form of real estate taxes.

It varies by community. It’s important for individuals to research the specific town they’re looking to move to. They need to know the tax rate that community assesses and how the valuation of the home is computed.

Those two factors could add to the cost of real estate taxes. All of those great tax savings we talked about can be somewhat offset by a higher-than-average real estate tax bill. If you’re looking at it from a pure tax perspective, you have to crunch those numbers and see where things fall out.

What should retirees with businesses consider?

Powell: We often tell people in this series to look at the total tax burden, not just one particular tax as a reason to move or stay. What about people who retire with a business in New Hampshire?

Guarino: That was one other tax that could potentially come into play. New Hampshire has two types of business taxes, depending upon filing thresholds: a business profits tax, which we call BPT, and a business enterprise tax.

There are thresholds that will require a tax filing if you’re running a business in New Hampshire. You need to be aware of what those thresholds are. Even in retirement, if you’re doing something generating that level of income, you have to be aware that there could be an additional tax.

What everyday costs belong in the retirement budget?

Powell: Walk us through what daily life in New Hampshire might cost someone. There are factors outside property taxes, sales taxes and income taxes that we need to consider, right?

Guarino: This is where the financial planner comes into play alongside the tax adviser. We can crunch the numbers and weigh the pros and cons, but the reality, especially for retirees, is: What’s my day-to-day going to look like?

Think about the climate and the additional heating costs that may be incurred for a colder or longer winter than in other states. Snow removal, roof raking, all of those things factor into additional out-of-pocket costs.

You look at the positive and say, “I’m saving this much money in terms of taxes.” But you also have to look at how much additional expense you’re incurring by living here.

In Massachusetts, where we’re located, public transportation is pretty abundant. Outside the metropolitan areas of New Hampshire, you may have less accessibility and additional costs. Those factors need to be contemplated before making a move.

On one side, you’ve got tremendous tax savings. On the other side, you’ve got perhaps higher day-to-day costs that you’re going to incur.

How did investment income taxation change in 2025?

Guarino: One other thought from an investment standpoint ties into tax reporting. New Hampshire no longer has an interest and dividends tax.

Prior to 2025, even retirees with significant interest and dividend income from their portfolios had a tax assessed on that income. As of 2025, that no longer exists.

For a retiree who may have a portion of their portfolio invested in bonds, those of us in a state that taxes income look at our own state’s municipal bonds. The majority of that interest income is going to be tax-free not only at the federal level, but at the state level.

For us in Massachusetts, we’d be looking at Massachusetts municipal bonds because that interest income would be tax-free at both levels. Municipal bond income from other states, even though it’s tax-free at the federal level, would be subject to tax in Massachusetts.

If you’re a New Hampshire resident, that’s a nonfactor. It opens up the window for you and your investment manager to evaluate municipal bonds throughout the country. You don’t care if they’re from New Hampshire or another state, because you don’t have that state-level tax to worry about.

Why might personal priorities outweigh tax savings?

Powell: I know plenty of people in Massachusetts who have moved to New Hampshire for the reasons you’ve outlined, despite the property taxes and other costs. You’re a Massachusetts resident. Do you have designs on moving to New Hampshire when you retire?

Guarino: Despite the income tax consequences of being in Massachusetts, there are so many other factors that keep me grounded here, and I think many others as well.

We didn’t get into the details on the nontax reasons to select a retirement state. New Hampshire offers so much to its residents, especially if they’re looking for a slower, quieter pace of life. If they’re in tune with Mother Nature, there are abundant mountains, lakes and ponds. The fall foliage this time of year is fantastic.

As retirees, and as we age, we need to think about transportation, access to hospitals and medical care, and conveniences we may need more now than when we were more agile.

There are so many factors that go into deciding where to retire. That’s where having advisers provide a pro-and-con list helps you weigh what’s most important to you. It’s not always going to be just about the income taxes.

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