Key Takeaways:

  • New Hampshire is one of the most employer-friendly states in the country, with no state income tax whatsoever on earnings and a repealed Interest and Dividends Tax starting Jan. 1, 2025.
  • The state follows the $7.25 federal minimum wage and federal overtime rules, but has strict timelines for issuing final paychecks (within 72 hours of involuntary termination).
  • There are two major business-level taxes to be aware of: Business Profits Tax at 7.5% and Business Enterprise Tax at 0.55%. Like a gross receipts tax, the latter considers employee wages its main source of revenue.
  • The state applies both a three-part ABC Test for unemployment insurance and a seven-factor test for workers’ compensation eligibility. Both classify workers as employees. Using an EOR can help provide some peace of mind against potential risks.
  • Offering Paid Family and Medical Leave is optional in New Hampshire. The program replaces 60% of an employee’s wages. If you offer it, you can qualify for a tax credit of up to 50% of the Business Enterprise Tax.

The economy of New Hampshire in 2025 has shown modest signs of recovery. The state’s GDP totaled $99.3 billion, an annual increase of 3.6%. Knowledge-intensive industries such as health care and social assistance, professional and technical services, and real estate continue to play dominant roles in the economy. These industries employ a large percentage of New Hampshire’s workforce, which totals over 780,000 residents.

Business owners in New Hampshire operate in an environment that is widely regarded as having a friendly climate. This is attributed to the state’s lack of sales tax and personal income tax. The cost landscape for employers is affected by high property taxes and the obligations related to the Business Enterprise Tax (BET) and Business Profits Tax (BPT).

As a moderate-regulation state that values business flexibility, New Hampshire has a low unemployment rate of 3.2% and a demographic profile with more deaths than births, which can make finding workers the main obstacle to growth.

New Hampshire Employer of Record

new hampshire employer of record

A New Hampshire Employer of Record (EOR) is a legal employer of record for an organization’s employees in New Hampshire. The EOR assumes all legal obligations and liabilities as an employer in the state, while the client organization manages the functional aspects of the employee’s day-to-day activities. An EOR is responsible for an organization’s payroll, state and federal taxes, and full compliance with New Hampshire Revised Statutes Annotated (RSA).

What is an EOR can help explain how this employment model works in more detail.

This includes registering employees with New Hampshire Employment Security (NHES) and reporting new hires to the Division of Child Support Services, and filing all mandatory documentation within the 20-day window stipulated by the state.

Signing up with an EOR also removes the need to set up a local legal entity (additional registrations with the Secretary of State and the Department of Revenue Administration are required in this case). The employer of record model also transfers all employment liabilities to the EOR, including all workers’ comp claims and unemployment insurance (UI) issues.

The most obvious benefit to this setup is the speed of hiring. The EOR is already registered in the state, carries all requisite insurance policies, and is able to process the onboarding of talent within a few days.

What Is the Difference Between a New Hampshire Employer of Record and a New Hampshire PEO?

PEO

In a PEO model, the legal employer of record is both your company and the PEO under a co-employment arrangement. If you’re going with a PEO, you’ll need to have your own entity formed in New Hampshire, but the PEO will be your administrative partner that you use to manage payroll and benefits administration, etc.

In a PEO relationship, the client business is still the employer of record for many legal and tax purposes. That means that they still bear legal liability in cases of employment compliance failures or employee lawsuits. PEOs have traditionally been the go-to choice for established businesses with some existing in-state presence who want to outsource their HR complexity.

EOR

The Employer of Record model provides the opposite approach by taking on all the legal responsibility for the employee and thus, is the only legal employer on paper. An EOR can help clients hire employees in New Hampshire without a New Hampshire business registration because they are the employers of record for the employees through local entities.

The EOR effectively becomes the legal employer on paper, which can provide a competitive market-entry advantage for businesses looking to “dip their toes” in the New Hampshire market or hire remote workers while also saving time and money that would otherwise go towards the entity formation and compliance requirements associated with a PEO client-company relationship.

Start hiring with a New Hampshire EOR

Let us handle the complexities of hiring, compliance, and payroll in New Hampshire while you focus on growing your team.

  • Hire employees in New Hampshire with a New Hampshire EOR
  • No local entity is needed
  • Pricing starts at USD 199 per employee
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How Does a New Hampshire Employer of Record Work?

The detailed workflow for a New Hampshire EOR operation can be described as follows. An employment contract, compliant with New Hampshire “at-will” employment standards and the federal minimum wage, is established.

The EOR then opens a payroll for that employee, including the assignment of that employee to the EOR’s preexisting account for state unemployment insurance with New Hampshire Employment Security (NHES), thereby bypassing the typical 7-to-10-day waiting period for businesses new to the state to receive a Determination of Liability from the state.

The EOR will also perform ongoing tax withholding and remittance. While New Hampshire does not tax wages at the state level, there are federal tax withholdings and state-level employer taxes, such as State Unemployment Insurance (SUI), that the EOR will handle.

An EOR also performs benefits administration for those benefits the company offers, such as health insurance, retirement plans, and New Hampshire’s voluntary Paid Family and Medical Leave (PFML) insurance program.

Additional ongoing compliance services will monitor New Hampshire’s changing business tax thresholds (Business Profits Tax, or BPT, for example) and other state Department of Labor requirements, such as mandatory workplace posters.

How Labor Laws Affect Hiring in New Hampshire?

Minimum Wage & Overtime

New Hampshire follows the federal minimum wage of $7.25. This has been the case since 2011. The minimum hourly wage for tipped positions, such as hospitality workers, is $3.27. However, if tipped employees’ tips do not equal $7.25 per hour, then the employer is required to make up the difference.

New Hampshire has no state overtime laws, so the federal FLSA standard applies. This means that non-exempt employees are entitled to time-and-a-half overtime for work in excess of 40 hours per week. Note that this is based on a week, so there is no overtime on a daily basis.

Employers should note that salaried is not necessarily equal to “exempt”. An employee is only exempt from overtime if they perform certain job duties and are paid at least the salary threshold.

Income Tax

New Hampshire does not tax individual wages, salaries, or self-employment income. Effective since 2025 tax year, New Hampshire also repealed the Interest and Dividends (I&D) Tax on passive income above certain thresholds.

The I&D Tax repeal makes New Hampshire even more attractive for high-skilled remote workers and retirees, as New Hampshire is now the only state in the region that doesn’t have an income tax or a general sales tax.

The lack of state income tax also means there are no withholding obligations at the state level, which is an added perk for employees who live in the state.

State Unemployment Insurance (SUI)

State Unemployment Insurance is a tax employers pay to provide benefits to workers who become unemployed through no fault of their own. New Hampshire’s taxable wage base is $14,000 per employee. New employers generally pay a state-mandated tax rate of 1.7%, reduced by a 1.0% administrative contribution surtax for positive-rated employers in certain categories.

Experienced employers are given a rate based on their experience with unemployment claims over time, as low as 0.1% and as high as 7.5%. Reports and payments are due quarterly to New Hampshire Employment Security.

New Hampshire does not require employers to provide paid sick leave or general paid vacation benefits. However, New Hampshire has enacted a voluntary Paid Family and Medical Leave (PFML) plan. The NH PFML program began in 2023. It provides employees up to 60% of their average weekly wage for up to six weeks in a year for a covered event, like the birth of a child or a serious health condition.

Employers may pay the entire premium for employees, share the cost, or permit employees to elect into the program on an individual basis. Employers providing this benefit through the state’s designated partner, MetLife, are eligible for a 50% Business Enterprise Tax credit on premiums paid.

Workers’ Compensation

In New Hampshire, workers’ compensation coverage is required if your business has any employees, even part-time or relatives. Because New Hampshire has a private insurance market, coverage can be purchased through any licensed commercial carrier or by obtaining approval from the state to self-insure.

Workers’ compensation provides benefits to the team if they become injured on the job. It can pay for medical expenses, lost wages, and vocational rehabilitation. As long as the employer posts a notice in the workplace that they are covered, and files a First Report of injury with the Department of Labor within 5 days of knowing an injury has occurred, the employer should be in compliance.

Termination and Final Pay

In New Hampshire, employment is presumed to be “at will”. This means that an employer can fire an employee at any time for any legal reason. However, terminated employees are protected by New Hampshire’s strict final paycheck law.

On termination of employment (fired) against their will, pursuant to New Hampshire Revised Statutes Annotated 275: 44, an employer shall pay, as wages due the employee, the employee’s final paycheck at the time of discharge or on the next regular payday, whichever occurs first. In the event of a lay-off, where there is not enough work for the employee.

Upon quitting, if at least one full pay period’s notice is given of the impending resignation, then the final paycheck must be given to the employee within 72 hours of the actual date of quitting. However, if less than one full pay period’s notice is given, the final paycheck is due on the next regular payday.

If an employee’s time is unpaid, such as a vacation or PTO balance, the employer must pay out the time if the company has a written policy or the employee’s contract provides for the payment of the balance. In the absence of such a policy, the employer is under no obligation to pay it out.

Employers who fail to meet these deadlines can be subject to wage penalties and Department of Labor audits.

Payroll Taxes and Employer Cost in New Hampshire

The true cost of an employee in New Hampshire includes all federal taxes as well as the New Hampshire business taxes that are levied in addition to federal payroll taxes. The biggest relief to the employee is the lack of a state income tax, but for the employer, there are mandatory contributions.

Category
Cost
Social Security (Federal)
6.2% (split between employee and employer) on wages earned up to an estimated $176,100.
Medicare (Federal)
1.45% (split between employee and employer). An additional 0.9% on wages in excess of $200,000.
FUTA (Federal Unemployment)
0.6% on first $7,000 of wages (paid by employer only).
SUI (State Unemployment)
1.7% (paid by employer only). On the first $14,000 of wages for new employers only.
Business Enterprise Tax (BET)
0.55% of enterprise value base (paid by employer only).
Workers’ Compensation
Variable, depending on the industry ($0.10/$100 for clerical labor, for example) (paid by employer only).

The Business Enterprise Tax (BET) is a tax unique to the state of New Hampshire. It is levied at a rate of 0.55% on the “enterprise value tax base.” The “enterprise value tax base” is the total of all compensation, interest, and dividends paid by the business.

For tax years beginning in 2025, a BET return must be filed when either gross receipts or enterprise value base exceeds $298,000. The Business Profits Tax (BPT) of 7.5% on taxable profits is assessed on businesses with gross income over $109,000.

Example Cost Breakdown

The following example shows the employer burden for a professional employee making $100,000 per year in New Hampshire. It is based on a typical clerical employee and assumes a low risk for workers’ compensation.

Assuming the worker has a $100,000 salary, the employer would pay:

Category
Cost
Social Security (Federal)
$6,200 (6.2%)
Medicare (Federal)
$1,450 (1.45%)
FUTA (Federal Unemployment)
The employer would pay $42, or 0.6% of the first $7,000 in wages.
SUI (State Unemployment)
$238.00 (1.7% of the first $14,000)
Business Enterprise Tax (BET)
$550.00 (0.55%)
Workers’ Compensation
About $120.00 ($0.12 per $100 in payroll)
Total Annual Costs
Employee costs are $108,600.00 or an estimated employer burden of 8.6%.

This burden is one of the lowest in the country and will be lower than most other states if the employer is located in a state that imposes a paid leave tax or has a higher SUI wage base. Employers with high-risk jobs like construction may see this cost increase substantially, as workers’ compensation rates are typically higher than $10.00 per $100 in payroll.

Employee Classification Rules in New Hampshire

New Hampshire takes a very strong position in regard to employee/contractor relationships. In the context of unemployment insurance, they use the “ABC Test” (RSA 282-A: 9, III) where the worker is presumed to be an employee unless all of the following can be proven: (A) the worker is free from control and direction over the performance of the service; (B) the service is performed outside the usual course of the business; and (C) the worker is customarily engaged in an independently established trade, occupation, profession or business. All three prongs must be met to determine that a worker is a contractor.

Violators are subject to civil fines of up to $2,500, assessment of back-payment of SUI taxes and workers’ comp premiums, and can face legal liability for unpaid overtime wages. This liability exposure is greatly mitigated by the use of an EOR, as all workers will be classified as employees of the EOR and be on their payroll.

What Makes Hiring in New Hampshire Unique?

Recruiting and hiring in New Hampshire could be described as “low tax, high competition”. The New Hampshire economy’s industry mix demands high levels of skill due to its concentration of high-tech manufacturing, professional services, and healthcare businesses. This need for a highly skilled workforce has put pressure on hiring, as labor force growth has remained low.

Regulatory environments may be less intense than neighboring Massachusetts, but employers should be aware of New Hampshire’s Business Enterprise Tax, which taxes employers’ compensation to employees. High-paying positions become a direct line item in the state’s business taxes.

The lack of personal income tax also comes into play when hiring remotely from New Hampshire. While residents will see high levels of net income working for out-of-state businesses, there have been several legal disputes when NH employees work for Massachusetts employers due to Massachusetts’ “telecommuter rule”.

An EOR can help mitigate any state-specific pitfalls when hiring across state lines and ensure employees receive 100% of the “New Hampshire Advantage”.

What Are the Benefits of a New Hampshire Employer of Record?

  • No Need for a Legal Entity – Avoids creating a legal entity in New Hampshire via Secretary of State or Department of Revenue registration
  • Quick to Staff – Get staffed in days by using our existing accounts with state agencies
  • Risk Transfer – Completely transfers 100% of employer risk and compliance
  • Manage Benefits – Administers New Hampshire’s Paid Family Medical Leave and rebate tax credit
  • Unified Platform – Manage distributed talent across New Hampshire and any other state through one platform

What Are the Downsides of a New Hampshire EOR?

Although the EOR model affords much faster turnaround and greatly reduces risk, you will pay a service fee that is likely more than what it costs to run a payroll if you already have an entity in New Hampshire.

Employers also won’t have as much control over the details of the employment agreement and chosen insurance carriers. This allows the EOR to ensure statewide compliance.

When compared to entity creation fees, local tax filings (BPT/BET), and potential misclassification penalties reaching into the thousands of dollars, an EOR will usually be the leaner and more predictable route for the New Hampshire workforce.

How to Choose a New Hampshire Employer of Record?

Employers should look for the following qualifications when choosing a New Hampshire EOR:

Flat Rate Pricing

You want predictable budgeting every month, which means your EOR should offer flat-fee pricing per employee. This fee should cover all state taxes and fees for that employee’s resident state.

In-house Operations

The EOR shouldn’t outsource to third-party vendors. Look for providers that operate their own legal entities within the United States to ensure the best compliance and data protection.

Specialized Experience

New Hampshire business taxes (BPT/BET) can get complicated when you factor in federal payroll requirements. Pick an EOR with experience filing returns in New Hampshire.

Exceptional Support

An EOR with local experience should be able to help you navigate New Hampshire’s specific final pay requirements (72 hours) as well as the state’s voluntary PFML program.

Proven Compliance

Choose an EOR that has a proven track record with workers’ compensation class codes and unemployment insurance state accounts. This can help you prevent administrative surcharges.

Engage a New Hampshire Employer of Record with RemotePeople

RemotePeople makes it easy for organizations to hire and pay teams in the Granite State. As RemotePeople’s Employer of Record, we handle NH’s Business Enterprise Tax, required workers’ comp insurance, and strict final paycheck deadlines.

Work with RemotePeople and gain access to New Hampshire’s skilled workforce without worrying about entity setup delays or independent contractor classification.

Contact us now to discover how our New Hampshire EOR services can help you scale teams quickly, compliantly, and without unnecessary costs.