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With the tax filing deadline fast approaching, a new analysis finds New Hampshire residents have the lowest tax burden in New England and one of the lowest nationally.

Meanwhile, just across the line in Massachusetts, soaring taxes on top earners are sending them fleeing to low-tax states like Florida and, yes, New Hampshire.

The new WalletHub analysis uses a metric of income taxes, sales taxes, and property taxes to calculate overall tax burdens. New Hampshire has the third lowest overall tax burden, trailing just Alaska and Delaware. New Hampshire’s performance is even more impressive when compared to other states in the region. Three of the five states with the highest tax burden are in New England (Maine, Vermont, and Rhode Island).

New Hampshire is the only New England state not in the top 20 for tax burden.

State Senate Finance Committee Chairman James Gray (R-Rochester) said New Hampshire’s low taxes and efficient government are some of the reasons for the state’s economic success. “There’s an awful lot of people who choose New Hampshire because we are fiscally responsible with our money,” Gray said.

A different Wallethub analysis last week ranked New Hampshire number one for taxpayer return on investment.

The one glaring exception was property taxes. Granite State homeowners have the third highest property tax burden in the country, according to WalletHub, behind Maine and Vermont.

Gray said New Hampshire’s reliance on property tax to pay for services like education gives voters the most control over their money possible. He said that local control likely results in lower spending and taxes than if the decisions were all made in Concord.

“You have to have something to run a government by, and a lot of the things that we fund, especially schools, we pay for through a property tax,” Gray said. 

The effects of New Hampshire’s low taxes and efficient spending don’t end at the border. A new report from the Massachusetts Society of CPAs on the impact of the Bay State’s new “millionaire’s tax” — which raises the top state income tax rate to nine percent — says 82 percent of CPAs report they have high-income clients seriously considering relocating in the next 12 months. 

And tax-free New Hampshire is near the top of their list of potential destinations.

“Florida and New Hampshire are overwhelmingly the most popular choices for relocation,” the CPA report states. “While some may argue that a move to Florida is driven by a desire for better weather and a different lifestyle, the fact that the second most popular destination is New Hampshire suggests that people want to stay in the area but may be motivated instead by a lower cost of living, including a lower tax burden.

“Furthermore, New Hampshire is set to repeal its Interest and Dividends Tax by 2026, which would decide to relocate even more appealing.”

Granite State Democrats tried but failed to push through legislation reversing the repeal of the interest and dividends tax for people earning $50,000 or more per year.

New Hampshire already has the strongest economy in New England, with low unemployment and low poverty rates. The Live Free or Die state’s commitment to low taxes will help it stay in the pole position, according to Joseph Krupka, an accounting professor at Florida State University.

“Here is a simple answer, the lower state tax burden will drive the state economy. Corporations seek state tax incentives when developing long-term strategies for where to locate new facilities such as plants and offices,” Krupka said. “Reduced corporation and real estate tax burdens along with a favorable personal income tax for their employees are the two keys.”

Gray knows there are a lot of factors considered by business owners who want to relocate, from infrastructure and energy costs to the local labor supply. Some states even offer financial incentives that New Hampshire does not currently match. But, he said, New Hampshire will keep to its low-tax structure.

“That’s just the way we do it,” Gray said. 

The world is coming to the Granite State as businesses from across the globe are setting up shop in order to get their cut of the ‘New Hampshire Advantage.’

The new report on New Hampshire Foreign Direct Investment prepared by the New Hampshire Department of Business and Economic Affairs, Plymouth State University, and the World Affairs Council of New Hampshire shows New Hampshire gaining a leading edge in attracting businesses from nearly every continent.

New Hampshire is outperforming the national average when it comes to employment from foreign companies and investment.

“New Hampshire’s low taxes, skilled workforce, and proximity to domestic and foreign markets are advantages few states can offer to companies poised for international growth,” BEA Commissioner Taylor Caswell said. “These data and findings will be useful in our efforts to attract businesses to New Hampshire and create high-paying jobs for years to come.”

According to the report, written by PSU professors Roxana Wright and Chen Wu, New Hampshire outperformed the national average when it comes to investment from global firms. Foreign subsidiaries employed 50,700 people in the state in 2020, which is 8 percent of the state’s overall private-sector employment, higher than the national average of 6 percent. Right said this level of global investment runs throughout all industries and locations in the Granite State, strengthening the New Hampshire economy.

Plymouth State University professors Roxana Wright, left, and Chen Wu present their findings in the 2021-2022 NH Foreign Direct Investment Report at the New Hampshire Foreign Direct Investment Forum on Thursday

“Foreign direct investment and international connections touch many of the industry segments and all key supply chain activities in New Hampshire,” Wright said. “And international businesses contribute to financing availability for private and corporate residents, to the growth of local markets and industries, and to the resilience of production capacity.”

The PSU report found that in 2022 nearly 180 foreign companies headquartered in 23 foreign countries had more than 360 subsidiaries from some 50 industries operating across the ten counties in New Hampshire.

Most of the foreign-owned subsidiaries are in the finance and insurance industry, making up 28 percent of foreign firms. About 75 percent of these finance companies operate in Hillsborough and Rockingham counties, but the rest of the state is benefiting from foreign investments, the report found.

Wright and Wu’s report found there is plenty of potential for growth in foreign manufacturing investment in the North Country as well.

After finance and insurance companies, foreign investment is spread evenly across a wide spectrum of industries, including retail, research, manufacturing, real estate, and transportation. The foreign investment throughout New Hampshire’s economy shows the opportunity companies around the world see in the Granite State, and it makes local industries stronger, Wu and Wright say.

“The diverse presence of foreign firms within industries once again demonstrates the high level of integration that foreign businesses have with a wide range of lucrative activities in the state,” Wu and Wright’s report states. “For successful operations, it can be expected that these firms collaborate and partner with local, domestic, and non-domestic companies and institutions and are an intricate part of New Hampshire business.”

Canada leads the way when it comes to foreign companies investing in New Hampshire, with 118 subsidiaries in 2022. They’re followed by the United Kingdom’s 53, Switzerland’s 30, Japan’s 25, and Germany’s 23.

These foreign firms are spread unevenly throughout the state, with most in the southern parts of New Hampshire, dominated by Hillsborough and Rockingham counties who host companies from around the globe. The Norty Country’s Coos County is home to just two foreign subsidiaries, both from Canada. 

The full report is available on PSU’s webpage.