New Hampshire: Beyond the Wage Tax Advantage
New Hampshire has no tax on wages but still taxes interest and dividends at 5% (being phased out). Federal taxes remain your biggest retirement challenge.
The New Hampshire Tax Reality
New Hampshire doesn't tax wages, but interest and dividends are taxed (phasing out by 2027). Federal taxes remain the primary concern for retirees.
✅ The Good News
- No tax on wages or salary
- Interest/dividend tax being phased out
- No sales tax
- Strong property rights tradition
⚠️ The Challenge
- Currently 4% on interest/dividends (2024)
- Federal taxes still apply (up to 37%)
- High property taxes
- 401(k) distributions fully federally taxed
New Hampshire Tax By The Numbers
Section 7702: Your Tax Freedom Solution
Section 7702 of the IRS tax code creates a powerful opportunity: access your retirement funds through policy loans that can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. For New Hampshire residents, that is not an escape from every federal or state tax.
Loan tax treatment
Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal tax. Education only.
State Tax-Free
New Hampshire already has no income tax—Section 7702 addresses the federal burden that remains.
New Hampshire Professionals We Typically Serve
Tech Professionals
Software engineers and tech executives in southern NH
Healthcare Professionals
Physicians at Dartmouth-Hitchcock and other NH hospitals
Boston Commuters
High earners living in NH, working in Massachusetts
Manufacturing Executives
Leaders in NH's precision manufacturing sector
University Professionals
Dartmouth and UNH faculty and administrators
Finance Professionals
Insurance and financial services professionals
New Hampshire Areas We Serve
Matt Nye's Recommendation
"New Hampshire's motto is 'Live Free or Die'—and the state takes it seriously. No sales tax, no wage tax, and the interest/dividends tax is being phased out by 2027."
"But the federal government didn't get the memo. They're still taxing your 401(k) withdrawals at 22-37%, regardless of where you live."
"For my NH clients—especially the Boston commuters who dealt with Massachusetts taxes for years—Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC (lapse/MEC can make loans taxable). Education only. That's the New Hampshire way."
— Matt Nye, 20-Year Industry Veteran
Frequently Asked Questions
The interest and dividends tax is going away. Why Section 7702?
By 2027, NH will have zero state income tax of any kind—great news! But federal taxes remain. Your 401(k) is still federally taxed at 22-37%. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal tax. Education only.
I live in NH and work in Massachusetts. How does this work?
Massachusetts taxes non-residents on wages earned in the state. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only.
New Hampshire has high property taxes. Does Section 7702 help?
Directly, no. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal tax. Education only.
Why not just invest in tax-free municipal bonds?
Municipal bonds are income-tax-free but tied to bond rates. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only.
What about the 'Live Free or Die' philosophy?
That motto is about independence. Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC. Lapse or MEC treatment can make loans taxable. That is not an escape from every federal or state tax. Education only.
Ready for New Hampshire Tax Freedom?
Section 7702 policy loans can stay income-tax-free while the policy stays in force and is not a MEC (lapse/MEC can make loans taxable). That is not an escape from every federal or state tax. Education only. Schedule your free analysis today.
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