New Hampshire Tax-Free Investing:

What the 2026 Rules Mean for Your Portfolio

Understanding New Hampshire’s Tax-Free Investing Landscape

Robert J. Walczak, CFP®, AIF®

CERTIFIED FINANCIAL PLANNER™

A Guide from CFP® Professional Robert J. Walczak

New Hampshire tax-free investing became a reality for every resident in 2025. The state fully repealed its last remaining income tax, the tax on interest and dividends. As a result, 2026 is the first full year New Hampshire investors are filing without it. Consequently, many portfolios built around the old rules haven’t been updated to reflect what’s actually changed. Robert J. Walczak, CFP®, AIF®, has built his practice in New Hampshire since 2004 and helps clients across Rockingham County put this shift to work in their financial plan.

This guide covers what changed, what it means for your investments, and where New Hampshire investors most often leave value on the table.

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What Changed: The Interest & Dividends Tax Repeal, Explained

For over a century, New Hampshire taxed interest and dividend income even though it never taxed wages. That tax phased down gradually, 5% to 4% to 3%, before being fully repealed effective January 1, 2025.

Therefore, as of 2026, New Hampshire has no income tax of any kind: not on wages, not on interest, not on dividends, and not on capital gains. For a retiree drawing $200,000 a year in dividend income, this is real money. A bill that could have run several thousand dollars a year under the old rules now runs to zero.

What This Means for Your Investment Strategy

The old I&D tax specifically targeted interest and dividends. Many New Hampshire investors built portfolios around minimizing that exposure – favoring municipal bonds, growth stocks over dividend payers, or tax-deferred accounts more heavily than necessary.

However, that specific tax no longer exists, so a strategy built to avoid it may no longer serve your goals. In addition, the repeal changes the calculus, too. Dividend-paying stocks, bond interest, and taxable brokerage accounts can stand on their investment merits again, instead of through the lens of a state tax that no longer applies.

Interest rates and retirement divident tax Granite Oak Private Wealth

Common Mistakes We’re Seeing Since the Repeal

Furthermore, we regularly see three patterns worth reviewing:

Holding municipal bonds purely for the old state tax advantage. Munis still make sense for some investors, but if state tax avoidance was the only reason, the calculation has changed.
Underweighting dividend-paying stocks out of habit. A portfolio built years ago to minimize I&D tax exposure may no longer match your actual goals.
Overlooking federal tax planning because state tax feels like a non-issue. New Hampshire’s zero state tax doesn’t change your federal capital gains rate, the 3.8% Net Investment Income Tax at higher income levels, or your federal Roth conversion math – all of which still deserve attention.

Building a Tax-Free State, Tax-Aware Federal Strategy

Ultimately, New Hampshire’s tax environment is a genuine advantage, but only if your plan is intentionally rebuilt around it, rather than left over from before the repeal. That typically means a full portfolio review, a fresh look at Roth conversion opportunities, and coordination with your CPA on the federal side, where the real complexity now lives.

New Hampshire and Tennessee are both tax free states that Granite Oak has offices in

An Advisor Who Understands Both of New Hampshire‘s, and Tennessee’s, Tax-Free Worlds

Granite Oak has offices in both New Hampshire and Tennessee, two of the small number of states with no tax on investment income. That dual footprint means Robert Walczak understands how tax-free investing strategies play out differently depending on each state’s broader tax structure, useful for clients with family or property ties to both regions, or those simply looking for an advisor fluent in this less common area of tax planning.

For clients exploring a similar move, our moving to Tennessee financial planning guide covers that transition in detail.

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Frequently Asked Questions About New Hampshire Tax-Free Investing

Does New Hampshire tax my dividends and interest in 2026?

No. New Hampshire’s Interest and Dividends Tax was fully repealed effective January 1, 2025, so dividend and interest income earned in 2026 is not subject to any New Hampshire state tax. Learn more about how this fits into a broader tax planning strategy.

What was the New Hampshire Interest and Dividends Tax?

It was a state tax on interest and dividend income, separate from New Hampshire’s lack of a wage tax. The rate phased down from 5% to 3% before being eliminated entirely starting with the 2025 tax year.

I live in the Windham area. How does the repeal affect my portfolio?

If your portfolio was built with the old I&D tax in mind, favoring municipal bonds or underweighting dividend stocks, it may be worth a fresh review. Our Windham, NH team regularly helps clients update strategies that were built around rules that no longer apply.

Do I still owe federal tax on my dividends and capital gains?

Yes. New Hampshire’s repeal only affects state tax. Federal capital gains tax, ordinary income tax on non-qualified dividends, and the Net Investment Income Tax for higher earners all still apply. A coordinated investment strategy accounts for both.

Should I still hold municipal bonds now that New Hampshire has no income tax?

Municipal bonds can still make sense for federal tax purposes or portfolio diversification, but if state tax avoidance was the main reason you held them, that specific rationale no longer applies. This is worth revisiting with an advisor.

Is New Hampshire a good state for retirees now?

For many retirees, yes. With no tax on Social Security, pensions, IRA withdrawals, interest, or dividends, New Hampshire’s tax environment is now about as favorable as it gets at the state level. Learn more about our approach to retirement planning.

Schedule a Portfolio Review with Granite Oak Private Wealth

If your approach to New Hampshire tax-free investing hasn’t been updated since the repeal, now is a good time for a review.

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