The Tax Foundation’s 2026 State Tax Competitiveness Index ranked New Hampshire the third most competitive state in the nation, up three spots from the prior year, NH Journal reports. The improvement was credited to the full repeal of the state’s Interest and Dividends Tax.
According to NH Journal, the latest jump built on a milestone reached the year before.
Last year, New Hampshire slipped past Texas to claim the No. 6 spot on the index.
NH Journal
The report frames the result as a boost to the state’s draw for newcomers and businesses.
Entering the top three states in tax competitiveness puts New Hampshire squarely in the conversation for millions of Americans looking for a good place to live, invest, or locate a business.
NH Journal
Eliminating the tax on passive income moved the state into rare territory, NH Journal notes.
That made New Hampshire the only state in the country with no individual income or sales tax at any level of government, state or local.
NH Journal
Tax Foundation analyst Jared Walczak explained the significance in an email cited by NH Journal.
“New Hampshire has been phasing out its tax on interest and dividend income for several years, but with the tax’s repeal as of January 2025, New Hampshire has joined an elite group of states imposing no individual income tax whatsoever and became the only state with no individual income or sales taxes at either the state or local level,” Jared Walczak, vice president of state projects at the Tax Foundation, wrote in an email.
NH Journal
The piece links lower tax burdens to long-running migration trends.
Decades of research — from academic studies and government data to moving company records — show that states with lower individual and corporate tax burdens tend to be more attractive to individuals, businesses, and investors.
NH Journal
The ranking caps a multi-year rise for New Hampshire on the index, with the state climbing into the top three after passing Texas, NH Journal reports. Walczak said completing the phaseout eliminated the tax along with its compliance and administrative costs, improving the state’s competitive standing.
For supporters of the state’s tax structure, the ranking served as validation of a years-long effort to phase out the Interest and Dividends Tax, NH Journal reports. The analysis suggests that completing the repeal not only improved New Hampshire’s standing but also placed it in rare company among states with no individual income tax at all.
The ranking caps a multi-year rise for New Hampshire on the Tax Foundation’s index, with the state climbing into the top three after passing Texas, NH Journal reports. Analysts credited the jump to the completion of the Interest and Dividends Tax phaseout, which took full effect in January 2025.
With that change, New Hampshire became the only state in the country with no individual income or sales tax at any level of government, according to NH Journal. The Tax Foundation’s Jared Walczak said completing the phaseout removed the tax along with its compliance and administrative costs, and the analysis ties lower tax burdens to long-running migration trends that favor lower-tax states.
Read the full story at NH Journal.
