It’s something homeowners have felt for decades. Now the numbers confirm it. A new analysis by the New Hampshire Fiscal Policy Institute (NHFPI) found that the state’s cities and towns relied on property taxes for 61% of their total revenues in 2022 — the highest proportion of all 50 states.
The report paints a stark picture. New Hampshire residents pay some of the highest property taxes in the country in raw dollar terms. Yet their cities and towns collect some of the lowest total revenues per person. The gap is driven by minimal state aid and almost no alternative revenue tools for local governments.
“The design and structures of the revenue-raising methods in New Hampshire make funding for public services disproportionately reliant on local property taxes,” the report concludes.
High taxes, low overall revenue
Here’s the paradox. In fiscal year 2022, New Hampshire property taxpayers paid an average of $3,388 per person. Only New Jersey was higher at $3,617. The national average was $1,943. Alabama, the lowest, came in at $697.
Despite those high property taxes, total revenue collected by New Hampshire cities and towns — from all sources combined — was just $5,076 per person. That ranks the state 40th nationally, well below the national average of $7,021. New York’s local governments led the country at $11,169 per person.
How is that possible? Two reasons stand out. First, states like New Jersey and Connecticut raise far more in state-level taxes and share significantly more of that revenue with their municipalities. Second, New Hampshire gives its cities and towns almost no other way to raise money.
As a “Dillon’s Rule” state, New Hampshire municipalities can only take actions expressly authorized by the Legislature. The state hasn’t approved local sales taxes, gas taxes, or restaurant and lodging taxes. So when the state doesn’t cover a cost, the property tax is the only lever available.
New Hampshire ranks 48th in overall per-person state aid to cities and towns. Only 23% of local government spending comes from the state — the 44th highest percentage nationally.
The property wealth divide
The report also highlights a growing divide between towns with high property values and those without. Wealthier towns can raise more revenue with lower tax rates. Poorer towns must set higher rates just to fund basic services.
That gap affects more than just schools. It shapes salaries for police and firefighters, the quality of infrastructure, public parks, and municipal programming. Two families living in $500,000 homes in different towns could pay vastly different tax bills — and receive very different levels of service.
The burden also hits lower-income households hardest. Property taxes consume a much larger share of annual spending for families in the bottom 20% of income than for those in higher brackets.
Businesses feel it too. The report found that 45.2% of all taxes paid by New Hampshire businesses are local property taxes. State business profits and enterprise taxes, by comparison, make up just 29.1%.
A heated political debate
The findings have split lawmakers along familiar lines. Democrats argue the state should share more revenue with municipalities to offset rising costs. The NHFPI report recommends increasing state aid, targeting property tax relief to lower-income households, and better distributing funds to towns with low property values.
Republicans rejected those conclusions. House Majority Leader Jason Osborne accused the NHFPI of advocating for a state income tax — something the report does not recommend.
“Our towns don’t have a revenue problem; they have a spending problem,” Osborne said. He pointed to House Bill 1300, the “Property Tax Protection Act,” which passed the House in March. The bill would require towns to put a school district property tax cap question on November ballots every two years.
Democrats oppose the bill. They say it would violate local control over ballot content and could hurt school budgets. Rep. James Newsom, a Democrat from Hopkinton, warned it would “irresponsibly disproportionately reduce revenue when compared to costs.”
The bill is now awaiting a Senate hearing. However the debate plays out, one thing is clear: New Hampshire’s relationship with the property tax is unlike any other state’s — and the pressure it creates isn’t going away.
