Anthony McVeigh •
The State of New Hampshire has enacted legislation accelerating the repeal of the Interest and Dividends Tax to January 1, 2025.
The State of New Hampshire has enacted legislation accelerating the repeal of the Interest and Dividends Tax to January 1, 2025.
Originally, in 2021 the State of New Hampshire enacted plans to phase out the Interest and Dividends Tax, which is collected from a percentage of income generated by wealth, that would eliminate the tax by January 1, 2027. However, New Hampshire Bill H.B. 2 has accelerated the process and now it will be eliminated by January 1, 2025.
The following are the rates in the years before the repeal.
After the 2024 tax return, the Interest and Dividends Tax will no longer exist and it will no longer affect individuals or businesses. S-corporations shareholders should take into consideration that their distributions will no longer be affected by the Interest and Dividends Tax.
Some questions remain. One of which is how this will affect partnerships and S-corporation LLCs. Historically, they have paid interest on a DP 10 instead of on their BPT return. Once Interest and Dividends Tax goes away, will they still be able to back out interest for BPT purpose?
The tax repeal is great news for individuals that have interest and dividends. Once Interest and Dividends tax is reduced to 0%, New Hampshire will become the 8th state that does not levy a state income tax and New Hampshire will also join Alaska as one of just two states not to levy either an individual income tax or a sales tax.
The following are the rates in the years before the repeal.
- 5% for all tax periods ending before December 31, 2023.
- 4% for all tax periods ending on or after December 31, 2023.
- 3% for all tax periods ending on or after December 31, 2024.
After the 2024 tax return, the Interest and Dividends Tax will no longer exist and it will no longer affect individuals or businesses. S-corporations shareholders should take into consideration that their distributions will no longer be affected by the Interest and Dividends Tax.
Some questions remain. One of which is how this will affect partnerships and S-corporation LLCs. Historically, they have paid interest on a DP 10 instead of on their BPT return. Once Interest and Dividends Tax goes away, will they still be able to back out interest for BPT purpose?
The tax repeal is great news for individuals that have interest and dividends. Once Interest and Dividends tax is reduced to 0%, New Hampshire will become the 8th state that does not levy a state income tax and New Hampshire will also join Alaska as one of just two states not to levy either an individual income tax or a sales tax.