In recent years, local governments in New Hampshire have relied more on property taxes as a revenue source than any other state in the country, according to a new report from the New Hampshire Fiscal Policy Institute. In 2022, local governments here turned to these taxes for 61% of their overall revenue.
At the local level, this means how much you may be paying in taxes and what your town offers in return can vary dramatically, depending on your zip code — even for similarly valued homes.
“New Hampshire disproportionately relies on local property tax bases to fund public services,” said Phil Sletten, the research director for the institute who authored the report. “So that means that a community that has a certain amount of property value within its municipal borders, that property value that's taxable is very deterministic, disproportionately deterministic, for the services that can be funded by that community in New Hampshire.”
Take a hypothetical home valued at $500,000, for instance. The property tax bill on that home can range from as low as $1,310 to as high as $18,270, the report found — a nearly $17,000 swing.
Bartlett, Newbury, and Wolfeboro are among communities with the highest taxable property value per person in the state, with values north of $740,000 per resident. Berlin has the lowest taxable property value per resident, at $113,269.
“What that means is that there are communities that have much more local fiscal capacity, or a much greater ability to raise more revenue from local property taxes, with a smaller tax rate on a per resident basis than other communities in the state,” Sletten said.
The report noted that certain natural features, like a lakefront or a ski area, can influence the tax base by boosting property values, and thus help offset the costs of public services.
Sletten said this reliance on property taxes for public services puts upward pressure on these rates. The report found that, adjusting for inflation, aggregate local property taxes increased 12% in the past 10 years.
The burden of these taxes falls disproportionately on low- and middle-income residents, Sletten said.
“For the lowest income households in the state, the effective property tax rate relative to their income is about three times what we see for the highest the very highest income households in New Hampshire,” he said.
Compared to the rest of the country, local governments in New Hampshire receive less money from the state government than almost every other state. In 2022, New Hampshire ranked 48th for per person amount of money provided to local governments from the state.
Sletten said part of why communities here rely so heavily on local property taxes is because the state restricts the types of revenue towns can raise on their own.
“Local governments are more reliant on property taxes than they might be if they had other revenue options, or if more revenue was coming from other sources, such as the federal government, the state government or other state and local tax revenue sources,” he said.
