By GARRY RAYNO, InDepthNH.org
CONCORD — Property taxes account for 63 to 64 percent of all the revenue state and local governments raise in New Hampshire.
However, that money is raised through widely varying rates across the state, financially impacting lower- and moderate-income property owners much more than the state’s higher income earners.
Property tax rates vary from about $2.62 to $36.54 per $1,000 of property value resulting in substantial differences in tax bills for similar homes across the state.
A $500,000 home in New Hampshire can cost the owner in taxes as little as $1,310 in Hart’s Location, to as much as $18,270 in Charlestown, according to a new analysis from the New Hampshire Fiscal Policy Institute.
The study, Property Taxes in New Hampshire: How They Work and How They Compare, examines how property taxes are structured, how they vary across communities, and how New Hampshire’s reliance on local property taxes compares to other states.
New Hampshire ranks the highest for the percentage of property taxes for state and local revenue and accounts for a far greater share than any other state.
New Hampshire is 20 percent above the next highest state, Texas, at 41 percent using 2022 figures.
Vermont and New Jersey are tied for third at 39 percent, while Rhode Island rounds out the top five at 36 percent.
At the bottom of the list is New Mexico at 14 percent and Alabama and Delaware at 15 percent.
At the same time, New Hampshire provides less state aid to local governments than almost any other state and does provide the least state aid to public education — most communities’ largest public expense — in the country.
The state ranks 44th in the country in state aid as a percentage of revenue for local governments at 23 percent.
“Property tax bills in New Hampshire can vary widely depending on where a home is located, even when the homes themselves have similar values and may be just across a municipal border from each other,” said Phil Sletten, Research Director at the New Hampshire Fiscal Policy Institute and the study’s author. “Because New Hampshire provides relatively little state aid while communities still face significant funding needs, property taxes play an outsized role in funding local services, leading to wide variation in tax rates and tax bills across communities.”
He also notes that poorer communities with the least property value per capita and the greatest needs for services are constrained.
“Disproportionately using property tax revenues to fund services, and having a higher likelihood of those dollars remaining only at the local level relative to other states, may result in communities with less wealth facing persistent limitations on their abilities to invest in themselves and their people,” Sletten said.
The analysis draws on municipal tax rate data, property valuation information, and national comparisons of state and local tax systems to assess geographic and household-level differences in tax burdens.
The study found neighboring communities can face significantly different tax bills for similar homes.
For example in 2025, a $500,000 home in Lee would cost about $13,805 in property taxes, while the same-value home in neighboring Nottingham would have a property tax bill of approximately $6,600.
In Sullivan County, a $500,000 home in Acworth would have a property tax bill of $8,030 compared to $18,270 for a similarly-valued home in nearby Charlestown.
Regional differences are also substantial, with a $500,000 home in Moultonborough costing about $2,665 in property taxes, compared to approximately $10,120 in Manchester.
Local communities in the state rely more on local property taxes to fund local services than most other states as well as they have few other options to raise revenue, according to the study.
New Hampshire is not a “home rule” state, which means local governments have only the powers state government has expressly granted them.
One thing they cannot do is institute their own taxes as other states allow cities and towns to impose their own sales taxes as New York City does.
The state has far more resources to draw revenues from than do city, towns, school districts or counties.
The state’s largest single source of revenue is from federal sources, but its largest source of state generated revenue is from business taxes which account for 35 percent of state revenue, while 16 percent comes from selective sales taxes such as beer and rooms and meals, 12 percent from the two statewide property taxes, tobacco and gasoline account for 5 percent each and all other levies are 27 percent.
For all state and local revenue, local property taxes account for 59 percent, and with the two statewide property taxes a total of 64 percent, while business taxes produce 13 percent.
The greatest tax expense in the state for businesses is property taxes at 45.2 percent, while the state’s two business taxes comprise 29.1 percent of their tax burden.
New Hampshire relies more on business taxes that most other states who have a general sales tax and an income tax.
Forty-five states have a general sales tax, and 41 have a broad-based income tax.
Only Alaska — like New Hampshire — has no general sales or income tax, but it is one of 38 states that allow cities and towns to collect their sales taxes and has considerable income from oil production.
As a state, New Hampshire taxes its residents the least per capita in the country at $2,514, with Florida, Texas, South Dakota and Missouri taxing slightly more and California and Hawaii at the top.
But when combined with local taxes — almost all property taxes —- New Hampshire jumps to 33rd at $5,669, per capita, still below the national average of $7,089.
The impact of combined state and local taxes on family income in New Hampshire indicate that those earning less than $35,000 pay 9 percent of their income in taxes, while those earning $721,000 and above pay 2.8 percent of their income in taxes.
Also those earning between $62,300 to $104,100 pay 6.7 percent of their earnings in taxes, and those earning between $104,100 to $153,900 pay 6.3 percent of their income to taxes, which Sletten attributes to property taxes.
“Excluding all other state and local taxes, property taxes in New Hampshire alone resulted in an effective tax rate of 5 percent for the 40 percent of taxpayers under 65 years old with incomes in the $62,300 to $153,900 range,” Sletten said, “this 5 percent rate from property taxes was only slightly lower than the 6.7 percent and 6.3 percent overall effective state and local tax rates for the two groups within that range, respectively.”
Within New Hampshire the disparities between communities in their ability to raise revenue from property values is striking.
Using property value per capita for comparisons, they range from New Castle, which has $1.6 million in property value per person, to Berlin, which has $113,269 per person, making it difficult for the city to raise money for services.
However, the per capita property tax paid in Berlin is $2,484 per person, while in New Castle it is $5,800.
“Communities with relatively high property values per person, such as near lakes, mountains, and the Seacoast are more likely to have higher amounts of dollars paid per resident. These higher levels may be a combination of more properties without permanent residents, such as second homes, and higher median household incomes in some of these municipalities,” according to the analysis.
But Sletten noted some communities such as Stratford, Hinsdale, Haverhill, and Tilton do not follow these patterns, as none of them have relatively high incomes nor a major natural amenity or attraction within their borders that would attract other commercial or recreational properties.
“New Hampshire relies more heavily on property taxes than any other state, and those taxes represent a significant and growing share of how public services are funded, with lower-income households bearing a larger share of that cost,” said Sletten.
The analysis also includes three interactive maps, including one that allows users to explore how property tax bills for similarly valued homes vary across New Hampshire communities.
A table of the town-by-town data is also available for download.
To read the full study and explore the interactive map, visit https://nhfpi.org/resource/property-taxes-in-new-hampshire-how-they-work-and-how-they-compare/.
Garry Rayno may be reached at garry.rayno@yahoo.com.