This is interesting. While the House is considering HB 1686 to draw on the interest and dividend tax as a large source of additional funding for the Education Tax Credit program (the original voucher program, established in 2012 but never gaining the support it needed through donations from the New Hampshire business community), the Senate is bringing forward a bill to abolish that tax. Here is the report in the Union Leader:
The state Senate on Thursday voted 12-9 to phase out the state tax on interests and dividends over the next five years.
The bill now goes to the Senate Finance Committee for further review, and would also have to clear the House and its committees before heading to Gov. Chris Sununu for his signature.
The bill calls for a 20 percent reduction in the tax each year starting in 2020, leading to complete repeal by 2024.
Although New Hampshire does not have a tax on earned income, a 5 percent tax is assessed on interest and dividend income of more than $2,400 annually, $4,800 for joint filers.
The state Department of Revenue Administration calculates the change will cost the state $100 million in lost revenue, but the bill’s prime sponsor, Sen. Andy Sanborn, R-Bedford, believes that amount to be overstated.
“We have spent the last four years reducing taxes to make the state more business friendly and now we are eliminating taxes for individuals, primarily retirees who count on this income to live,” said Sanborn. “If we are to claim that New Hampshire is an income tax free state that should be reflective in our laws.”