Democratic candidate Joyce Craig and Republican candidate Kelly Ayotte are facing off in the race for New Hampshire governor, with taxes emerging as a major battleground between the two. Specifically, the interest and dividends tax has become a contentious issue in the campaign.
Craig has criticized Republicans for repealing the tax, which is being phased out and will be eliminated for the 2025 tax year. She has framed the move as a handout to the wealthy and has proposed restoring the tax with modifications to focus on higher earners.
Ayotte, on the other hand, has attacked Craig’s stance on taxes and has accused her of supporting tax increases. Republicans argue that the tax unfairly impacts people using investments as retirement income, and that eliminating it is consistent with New Hampshire’s reputation for having no broad-based income tax.
The interest and dividends tax is a state tax on distributions, dividends, and interest income from investments. Most Granite Staters do not pay the tax, with data showing that about 10 percent of tax filers paid it in the 2021 tax year. The tax is largely paid by upper-income taxpayers, with higher-income households benefiting the most from its repeal.
The tax has recently brought in substantial revenue, with $184.3 million collected in the 2024 fiscal year. This has been attributed to higher federal interest rates leading to increased returns on investments.
Craig and Ayotte have contrasting views on the tax, with Craig advocating for its restoration and Ayotte supporting its repeal. As the candidates make their final pitches to voters, taxes, particularly the interest and dividends tax, will continue to be a key issue in the gubernatorial race.
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