Introduction: Expat Tax New Hampshire Planning for British Families
The expat tax New Hampshire position is the simplest in New England, because the state taxes neither wages nor, since 2025, interest and dividends. However, simple does not mean empty. Federal tax still reaches every pound of UK income. Moreover, many British residents of New Hampshire work across the border, where Massachusetts taxes each day they spend in its offices. In addition, business owners meet a 7.5% profits tax that most newcomers have never heard of. Consequently, the saving is real, but it depends on where you work and how you hold your business.
At TaxYork, we prepare federal, state and UK returns for British biotech executives, technology founders, physicians, academics, investors and company owners across Portsmouth, Nashua, Manchester, Bedford and Hanover. In our experience, families move to New Hampshire for the tax position and then lose part of it through poor record keeping. Therefore this expat tax New Hampshire guide explains what the state leaves alone, what still applies and the evidence each claim needs.
Expat Tax New Hampshire Basics: One Layer for Most Households
A British family in New Hampshire usually faces one income tax layer. Federal tax reaches worldwide income, relieved by the foreign tax credit on IRS Form 1116. The state adds nothing on salary, pensions, rent, dividends or gains. Meanwhile, HMRC keeps taxing UK rent and UK property gains. A second layer appears only if you work in another state or run a business.
Who This Guide Is Written For
This guide addresses high-net-worth British nationals, dual national US UK families and accidental Americans living in New Hampshire, plus New Hampshire-domiciled Americans working in London. Specifically, it suits senior people in life sciences, technology, healthcare, finance and the university sector, together with retirees, investors and business owners holding UK property, pensions, ISAs or company shares. If that describes your household, the expat tax New Hampshire rules below decide how much of the headline saving you keep.
How New Hampshire Compares With Our Other State Guides
New Hampshire belongs to the small no-income-tax group. Like New Hampshire, Florida charges no personal income tax on UK income, and Texas adds community property rules to the same position. In contrast, Massachusetts charges 5% plus a 4% surtax on high incomes. Further south, Louisiana charges a flat 3% with no credit for UK tax. As a result, the expat tax New Hampshire position makes the state a natural base for Britons whose careers sit in greater Boston.
What New Hampshire Does Not Tax
New Hampshire taxes no category of personal income from 2025. For expat tax New Hampshire purposes, that statement is newer than many guides suggest. Therefore check the date on anything you read.
No Tax on Wages, Bonuses or Share Awards
New Hampshire has never taxed earned income. Salary, bonus, restricted stock and option gains earned for work performed in the state bear federal tax only. Furthermore, the state has no payroll-based income tax return for employees. Hence a British executive who works entirely from a New Hampshire office files a federal return and nothing else.
The Interest and Dividends Tax Has Gone
New Hampshire repealed its Interest and Dividends Tax for periods beginning on or after 1 January 2025. Previously, the state charged 5% on investment income, falling to 4% in 2023 and 3% in 2024. That tax reached dividends from UK companies and interest on UK accounts. Consequently, a British investor with a large sterling portfolio now pays no state tax on its income. Older expat tax New Hampshire articles that still describe the charge are out of date.
No Capital Gains Tax and No Sales Tax
New Hampshire charges no tax on an individual's capital gains. Therefore a gain on UK shares, a UK company or a London flat faces federal tax and HMRC only. In addition, the state has no general sales tax. However, it does charge 8.5% on restaurant meals, hotel rooms and car rentals. Notably, these expat tax New Hampshire rules together make the state attractive in the year of a large disposal.
UK Pensions and the State
New Hampshire does not tax pension income of any kind. A UK occupational pension, a SIPP drawdown and the UK State Pension all escape state tax. Moreover, no age test or exemption ceiling applies, because there is no charge to relieve. The federal position remains, and the guidance on claiming the State Pension abroad confirms that payments to America receive no annual increase.
What New Hampshire Does Tax
New Hampshire replaces income tax with property tax and two business taxes. Accordingly, the expat tax New Hampshire bill for a wealthy household is rarely zero. The charges simply arrive by a different route.
Property Tax Carries the State
New Hampshire relies on property tax more heavily than almost any other state. Each town sets its own rate, and secondary sources put the 2025 average near $17 per $1,000 of assessed value. Rates range from under $3 to over $36. Therefore a $1.5 million home can cost $12,000 in one town and $30,000 in another. Town choice is consequently an expat tax New Hampshire decision as well as a lifestyle one.
The Real Estate Transfer Tax
New Hampshire charges a transfer tax on property sales. Buyer and seller each pay $0.75 per $100 of the price, so the combined charge is 1.5%. On a $2 million purchase, your share is $15,000. Similarly, you pay the same rate again when you sell. British buyers used to stamp duty will find the figure modest, but it deserves a line in the budget.
The Business Profits Tax
New Hampshire charges a 7.5% Business Profits Tax on organisations carrying on business activity in the state. Importantly, the tax covers sole proprietors and single-member companies, not only corporations. The Department of Revenue Administration requires a return once gross business income from all activities exceeds $109,000, for periods beginning on or after 1 January 2025. Proprietors may generally deduct reasonable compensation for their own services. Nevertheless, a British consultant or founder working from home should expect a state filing, and it belongs in every expat tax New Hampshire review.
The Business Enterprise Tax
The Business Enterprise Tax applies alongside the profits tax. It charges 0.55% on the total of compensation, interest and dividends that an enterprise pays. A return is due once gross receipts or that tax base exceed $298,000. Furthermore, the amount paid counts as a credit against the Business Profits Tax. Hence most profitable businesses bear the higher of the two, not both.
Does the Business Profits Tax Reach UK Rent?
The Business Profits Tax depends on business activity within New Hampshire. Therefore a family whose only rental property is a London flat, run by a UK letting agent, is generally outside the charge. However, the position changes for someone already within the tax. The state draws no line between business and investment income for a filer, and it apportions the total by a single sales factor. Rents from property outside the state then sit in the denominator. Consequently, for expat tax New Hampshire purposes, anyone with a local business and UK property should have the apportionment prepared carefully.
Working in Massachusetts While Living in New Hampshire
Massachusetts taxes non-residents on income earned within its borders. For many readers, this is the largest expat tax New Hampshire issue, because the best-paid roles sit in Boston and Cambridge. New Hampshire cannot shelter wages earned on Massachusetts soil.
The Workday Fraction
Massachusetts apportions a non-resident's salary by working days. Under 830 CMR 62.5A.1, you multiply total pay by the days worked in Massachusetts over total working days. Holidays, sick days and leave drop out of both figures. Moreover, a day spent partly in Massachusetts counts as a whole Massachusetts day, unless you prove you spent more than half of it elsewhere. Therefore a morning meeting in Kendall Square can cost a full day of tax.
Rates and the Surtax
Massachusetts charges 5% on that apportioned income. In addition, the 4% surtax applies to taxable income above $1,107,750 for 2026. For a non-resident, the surtax looks only at income sourced to Massachusetts. As a result, a New Hampshire resident with $1.4 million of pay and a 60% workday fraction stays below the threshold entirely.
Why Your UK Income Stays Outside Massachusetts
Massachusetts taxes a non-resident on Massachusetts-source income only. UK rent, UK dividends, ISA income and UK property gains have no Massachusetts source. Hence they escape both the 5% rate and the surtax. In contrast, a Massachusetts resident pays state tax on all of them, and Massachusetts credits no UK tax. This difference, not the wage position, is often the larger expat tax New Hampshire saving for a family with substantial UK assets.
Keeping Records That Survive an Enquiry
The workday claim is only as good as its evidence. Accordingly, keep a contemporaneous calendar, building access records, travel receipts and your employer's remote work agreement. In addition, ask payroll to withhold on the correct fraction from January. Otherwise the employer withholds on full pay, and you wait for a refund on Form 1-NR/PY. A consistent diary is the single most valuable expat tax New Hampshire document for a cross-border commuter.
Residency, Domicile and Leaving a High-Tax State
New Hampshire has no income tax residency test of its own to fail. Instead, the risk lies in the state you left or the state you work in. For expat tax New Hampshire planning, proving that you really live in New Hampshire matters most.
The Massachusetts Statutory Resident Trap
Massachusetts treats you as a resident if you are domiciled there. Alternatively, it treats you as resident if you keep a permanent place of abode in the state and spend more than 183 days there. A Boston flat kept for late nights can satisfy the first limb. Workdays then count towards the second. Therefore a commuter with a city apartment should count every day, not only working days, or the expat tax New Hampshire benefit disappears.
Establishing a New Hampshire Domicile
Domicile means your true, fixed home. To establish it, move your family, register to vote where eligible, change your driving licence and vehicle registrations, and use the New Hampshire address on federal filings. Moreover, sell or let the former home where possible. A domicile claim supported only by a rented flat and a post box rarely survives review.
New Hampshire Domiciliaries Working in London
An American who keeps a New Hampshire domicile while working in London carries no state burden at all. No state return is due, and no test of intention arises. Federally, the exclusion on Form 2555 covers $132,900 of earnings for 2026, and the foreign tax credit usually covers the rest. Hence, on any expat tax New Hampshire comparison, it is among the best states to retain as a home base during a UK assignment.
Your UK Income Under Federal Rules
Federal tax applies in New Hampshire exactly as elsewhere. Because the state adds nothing, the federal computation is the whole expat tax New Hampshire result for UK income. Each asset class behaves differently.
UK Rental Income
HMRC taxes UK rent first, under the non-resident landlord rules. The federal return then taxes the same profit, with a credit for the UK tax. Additionally, the two countries compute profit differently. The United States allows depreciation on the building, whereas the UK restricts mortgage interest relief to a 20% credit. Therefore the credit rarely matches the federal tax exactly.
Selling a UK Property
A UK property sale triggers two charges for a New Hampshire resident. HMRC taxes non-residents on UK residential property gains at 18% or 24%, with a return due within 60 days. The federal return taxes the dollar gain at up to 20%, relieved by the credit. Moreover, the 3.8% net investment income tax applies, and current law allows no foreign credit against it. As a result, the combined rate is close to 28%, with no state layer on top.
ISAs, UK Funds and the Treaty
An ISA has no tax-free status in America. The federal return taxes its interest, dividends and gains each year. Furthermore, UK funds held inside the wrapper are usually passive foreign investment companies, each needing IRS Form 8621. The US-UK tax treaty gives no relief for the wrapper. Any treaty position you do take, for example on a UK pension, needs disclosure on IRS Form 8833.
The SALT Deduction Without an Income Tax
New Hampshire residents deduct property tax federally, within the SALT cap. For 2026 the cap is $40,400. However, it shrinks by 30% of income above roughly $505,000 and falls to a $10,000 floor. Consequently, most high earners deduct only $10,000 of a much larger property tax bill. Any Massachusetts non-resident tax competes for the same limited space, which trims the expat tax New Hampshire advantage slightly.
Foreign Account Reporting and Catching Up
The expat tax New Hampshire saving changes nothing about foreign reporting. Each US person with UK accounts above $10,000 in aggregate must file the FBAR with FinCEN. In addition, IRS Form 8938 applies once a joint US-resident couple holds more than $100,000 of foreign assets at year end.
Why Gaps Are Common in New Hampshire
Britons in New Hampshire often prepare their own returns, because no state return exists. As a result, the foreign forms are easy to overlook. A missed FBAR, missed reporting of a pension, investment account or ISA, and unfiled Form 8621 are the errors we see most. Our FBAR and FATCA reporting service covers each form.
Putting Missed Years Right
Missed US tax returns and missed reporting can be corrected before the IRS writes. Where the failure was non-wilful, the IRS Streamlined Filing procedures may apply. Likewise, missed UK tax returns for rental income can be brought up to date with HMRC. Acting early keeps the expat tax New Hampshire saving intact.
Case Study: A Biotech Executive in Portsmouth
The following illustrative expat tax New Hampshire case shows how the pieces combine. Oliver, 47, is a British green card holder and chief commercial officer of a biotech company in Cambridge, Massachusetts. He and his wife Hannah, also British, live in Portsmouth, New Hampshire.
The Income
In 2026 Oliver earns $1,400,000 in salary and bonus. He works 150 of his 230 working days in Massachusetts and the rest from home. The couple also receive $70,000 of UK rental profit and $30,000 of ISA income, and they sell a London flat for a gain of $200,000. UK income therefore totals $300,000.
The State Bills
Massachusetts sources 150/230 of the pay, which is $913,043. At 5%, the tax is about $45,650. Because that figure sits below $1,107,750, no surtax applies. New Hampshire charges nothing on the pay and nothing on the $300,000 of UK income. Property tax on their $1.6 million home, at an illustrative $14 per $1,000, adds $22,400.
The Comparison and the Lesson
Had the couple lived in a Boston suburb, Massachusetts would tax the full $1,700,000. The 5% charge would be $85,000, and the surtax on the $592,250 above the threshold would add $23,690. The total of $108,690 is about $63,000 more than their actual bill. Notably, $27,000 of that difference arises on the UK income, which Massachusetts would tax with no credit for HMRC's charge. However, the result depends on the diary. At 190 Massachusetts days, sourced pay would reach $1,156,522, and the surtax would begin. Federally, the net investment income tax of $11,400 on the UK income remains in either case.
How TaxYork Can Help
TaxYork provides comprehensive US-UK tax return preparation, including expat tax New Hampshire compliance, for wealthy families with a New Hampshire connection. Specifically, we prepare the federal Form 1040, the Massachusetts non-resident return where needed, any New Hampshire business returns and the UK Self Assessment return together.
Expat Tax New Hampshire Returns Prepared as One File
Our team reconciles UK rental accounts to the federal schedule and computes the foreign tax credit by basket. Furthermore, we build the Massachusetts workday schedule from your calendar and reconcile it to payroll withholding. For treaty claims, our treaty relief and foreign tax credit service supports every position with the correct disclosure.
Business Owners and Year-Round Compliance
For founders and consultants, we prepare the Business Profits Tax and Business Enterprise Tax returns alongside the federal filing. In addition, we align US and UK reporting for owners of British companies. Our cross-border tax preparation service then keeps both countries consistent each year.
Conclusion
The expat tax New Hampshire regime removes the state layer from wages, pensions, investment income and gains. Consequently, a British family's UK income bears federal tax and HMRC's charge only. However, property tax is heavy, business owners face a 7.5% profits tax, and Massachusetts taxes every day worked within its borders. Furthermore, federal reporting of UK accounts, pensions and ISAs applies in full. Ultimately, the families who keep the saving are those who document their domicile, count their workdays and prepare the federal and UK returns as a single exercise.
Contact Us
If you hold UK property, pensions, ISAs or company shares and need expat tax New Hampshire returns prepared, speak to our team before your next filing deadline. You can book a consultation through our website, email hello@taxyork.com or call 020 3488 8606. We prepare returns for clients in Portsmouth, Nashua, Manchester and across the state, as well as for New Hampshire-domiciled Americans in the UK.
Disclaimer
This article provides general information only and does not constitute tax, legal or financial advice. Tax rules in the United States, New Hampshire, Massachusetts and the United Kingdom change frequently, and their application depends on your individual circumstances. Figures are illustrative and reflect our understanding of the law at the date of publication. You should obtain professional guidance from a qualified US-UK tax specialist before acting. TaxYork accepts no liability for actions taken in reliance on this article.