The Retirees Who Moved to New Hampshire for No Income Tax Say the Property Tax Bill Was the Part Nobody Mentioned
New Hampshire's zero income tax pulls retirees north from Massachusetts every year, but the tax bill waiting at the closing table catches many of them off guard. Whether the move actually saves money comes down to one ratio most people…
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Some retirees in Massachusetts and New York look at New Hampshire because it doesn’t tax their retirement income. IRS migration data for 2022 to 2023 shows Massachusetts was the biggest source of people moving into the state, with 10,603 tax returns.
The lack of a state income tax is a real benefit, and property tax bills can be higher than some buyers expect. This piece covers what New Hampshire taxes, why bills run high, what relief exists, and who comes out ahead.
Where New Hampshire Collects Its Money Instead
New Hampshire doesn’t tax wages or salaries, and the Tax Foundation says it repealed its old tax on interest and dividends effective January 1, 2025. It has no state sales tax and no estate or inheritance tax. That means IRA withdrawals, pensions, dividends, and Social Security all skip state income tax.
The money has to come from somewhere, and that’s property. Property taxes make up 59.5% of the state’s combined state and local tax revenue, and the effective rate on owner-occupied homes is 1.50% of home value. The Tax Foundation says states like New Hampshire and Texas rely heavily on them in lieu of other major tax categories, which pushes more services down to towns.
Schools account for a large share, and the New Hampshire Fiscal Policy Institute reports that nearly two in every three dollars of public school funding comes from local property taxes.
Massachusetts uses a different tax structure, with a flat 5.00% income tax, a 6.25% sales tax, and a 1.00% effective property tax rate. It also excludes Social Security from state income, according to a Massachusetts CPA firm’s summary.
Home Values Drive the Bill, and They’ve Climbed Fast
Over five years, the federal home price index rose 52.37% in Manchester-Nashua and 53.51% in Rockingham-Strafford. Higher values tend to show up in assessments eventually. Rates also vary a lot by town, from under $6 per $1,000 of assessed value in some places to over $27 per $1,000 in others.
Two houses at the same price can carry very different bills. The Wall Street Journal put it simply: “While state income-tax burdens might shrink, property taxes can jump, or vice versa.”
Running the Numbers Against Massachusetts
This comparison looks at retirement households living on Social Security plus taxable IRA or pension income. It uses the Tax Foundation’s statewide effective property tax rates applied to market value. It applies Massachusetts’ 5% rate to all taxable income and skips the state’s small exemptions. Federal tax is the same in both states, so it’s left out. Sales tax is left out too, which makes the Massachusetts total look a little lower than it really is.
| Scenario | NH Property Tax | NH Income Tax | MA Property Tax | MA Income Tax | NH Total | MA Total |
|---|---|---|---|---|---|---|
| $100,000 income, $500,000 home | $7,500 | $0 | $5,000 | $5,000 | $7,500 | $10,000 |
| $40,000 income, $700,000 home | $10,500 | $0 | $7,000 | $2,000 | $10,500 | $9,000 |
The first couple saves about $2,500 a year in New Hampshire. The second couple pays about $1,500 more. At these average rates, the break-even point is a home worth roughly 10 times taxable income. At a 4% withdrawal rate, $2,500 in annual savings is worth about $62,500 of portfolio. A $1,500 annual penalty takes about $37,500 of portfolio to cover, and that cost keeps rising as assessments increase.
Relief Programs Exist, but They’re Narrow
Towns offer a senior exemption under RSA 72:39-a, and each town sets its own amounts and limits. One town’s form, for example, takes $50,000 off the assessed value for owners 80 and older.
It caps income at $28,000 for a single owner and $53,000 for a married couple, and caps assets at $100,000 for a single owner. Other towns use other numbers.
The state’s Low and Moderate Income Homeowners Property Tax Relief program limits income to $37,000 for a single person and $47,000 for a household.
The NHFPI used an example in which a qualifying couple got a rebate of $162.36, while the average household property tax was about $7,470 in 2021. Those limits aren’t adjusted automatically for inflation. Retirees with income or assets above these limits won’t qualify for either one.
One Number That Decides Whether the Move Pays
Retirees with big pension or IRA income and a modest house usually come out ahead in New Hampshire. Retirees with a large house and modest taxable income often don’t. Some people do leave, too. In the same IRS data, 2,696 returns moved from New Hampshire to Florida.
The move tends to work when the home’s value stays under about 10 times the couple’s taxable retirement income. It also works when the portfolio can absorb a property tax bill that rises with assessments and stays near a 4% draw. A couple taking $100,000 a year from savings and buying a $500,000 house falls within that range.
A couple taking $40,000 a year and buying a $700,000 house falls outside it, though a lower-rate town or a smaller home would change the comparison. The statewide 1.50% average is a starting point. The specific town’s tax rate per $1,000 also affects the outcome, and with rates running from under $6 to over $27, the town’s rate can change the result.
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David Beren has been a Flywheel Publishing contributor since 2022. Writing for 24/7 Wall St. since 2023, David loves to write about topics of all shapes and sizes. As a technology expert, David focuses heavily on consumer electronics brands, automobiles, and general technology. He has previously written for LifeWire, formerly About.com. As a part-time freelance writer, David’s “day job” has been working on and leading social media for multiple Fortune 100 brands. David loves the flexibility of this field and its ability to reach customers exactly where they like to spend their time. Additionally, David previously published his own blog, TmoNews.com, which reached 3 million readers in its first year. In addition to freelance and social media work, David loves to spend time with his family and children and relive the glory days of video game consoles by playing any retro game console he can get his hands on.
