What is the New Hampshire Business Profits Tax rate?

The Business Profits Tax rate is 7.5% for taxable periods ending on or after December 31, 2023. It applies to income from business activity conducted in New Hampshire, after apportionment and after allowable deductions such as reasonable compensation for a working proprietor.

Self-Employment Tax in New Hampshire (2026)

Q: Does New Hampshire have a self-employment tax?

No. New Hampshire has no personal income tax on earned income and no state self-employment tax. Self-employed residents still pay the federal self-employment tax of 15.3% on Schedule SE. Separately, New Hampshire imposes the Business Profits Tax at 7.5% on proprietorships whose gross business income exceeds $109,000.

Q: When must a self-employed person file NH-1040?

A business organization taxed federally as a proprietorship, including a single-member LLC, must file Form NH-1040 if it conducted business activity in New Hampshire and its gross business income from everywhere exceeds $109,000 for taxable periods beginning on or after January 1, 2025.

Q: How much is federal self-employment tax?

15.3% of net earnings from self-employment: 12.4% for Social Security on net earnings up to $184,500 for 2026, and 2.9% for Medicare with no ceiling. Net earnings equal 92.35% of Schedule C profit. An additional 0.9% Medicare tax applies above $200,000 single or $250,000 joint.

Q: Does New Hampshire have a sales tax?

No. New Hampshire has no general sales tax. Specific activities are taxed separately, most notably through the Meals and Rentals Tax on restaurant meals, prepared food, and short-term room rentals, which requires a license from the Department of Revenue Administration.

Q: Will an LLC reduce my New Hampshire taxes?

Not by itself. A single-member LLC taxed federally as a proprietorship files the same NH-1040 return and remains subject to the Business Profits Tax on the same terms. Federally, the LLC is disregarded, so Schedule C and Schedule SE still apply.

Fact-checked by the LegalGlass editorial team against primary sources · Published Aug 20, 2026 · Last updated Aug 20, 2026

New Hampshire has no personal income tax on wages or self-employment earnings, but that does not make self-employment tax-free. You still pay the federal self-employment tax of 15.3% on Schedule SE, and New Hampshire imposes the Business Profits Tax at 7.5% on proprietorships whose gross business income exceeds $109,000.

Quick Answer

Federal SE rate: 15.3% (12.4% Social Security + 2.9% Medicare)
Social Security cap: 12.4% applies up to $184,500 of net earnings (2026)
NH personal income tax: None on wages or self-employment earnings
Business Profits Tax: 7.5% for taxable periods ending on or after Dec 31, 2023
BPT filing threshold: Gross business income over $109,000 (periods beginning on or after Jan 1, 2025)
Forms: Schedule SE and Schedule C with Form 1040; NH-1040 and NH-1040-ES

How Federal Self-Employment Tax Works

Self-employment tax is the federal Social Security and Medicare tax paid by people who work for themselves. The rate is 15.3%: 12.4% for Social Security plus 2.9% for Medicare. An employee splits those taxes with an employer; a self-employed person pays both halves, which is why the combined rate looks high.

You do not pay it on gross revenue. You pay it on net earnings from self-employment: business profit multiplied by 92.35%. The 12.4% Social Security portion applies only up to the annual wage base, which is $184,500 for 2026. The 2.9% Medicare portion applies to all net earnings with no ceiling, and an 0.9% Additional Medicare Tax applies above $200,000 of combined wages and self-employment income for single filers or $250,000 for joint filers.

You owe the tax once net earnings reach $400 for the year. It is computed on Schedule SE and attached to Form 1040, with the underlying profit computed on Schedule C. One-half of the self-employment tax is deductible in arriving at adjusted gross income, which softens the effective cost. See the national self-employment tax guide and the self-employment tax calculator.

New Hampshire Taxes the Business, Not the Paycheck

New Hampshire is one of a small group of states with no broad-based personal income tax on earned income. There is no state return for wages, and no state equivalent of Schedule SE. What New Hampshire taxes instead is business activity, through two business taxes administered by the New Hampshire Department of Revenue Administration.

That distinction matters for a self-employed person. A freelancer with modest revenue may owe nothing to New Hampshire at all. A profitable sole proprietor or single-member LLC crosses into the Business Profits Tax and files a state business return that most residents never see. The trigger is gross business income, not profit, so a business with high revenue and thin margins can be required to file even in a break-even year.

The Business Profits Tax (BPT)

The Business Profits Tax is New Hampshire's tax on income from business activity. The rate is 7.5% for taxable periods ending on or after December 31, 2023. All business organizations taxed federally as a proprietorship - including a single-member LLC - must file a Form NH-1040 Business Profits Tax return if they conducted business activity in New Hampshire and their gross business income from everywhere exceeds $109,000 for taxable periods beginning on or after January 1, 2025.

Read the threshold carefully. It is measured on gross business income, from everywhere, not on New Hampshire profit. A consultant billing $130,000 with $40,000 of expenses is above the filing threshold even though profit is well under it. Below the threshold, no BPT return is required. The Department of Revenue Administration adjusts the threshold periodically, so confirm the figure for your tax year on the department's Business Profits Tax FAQ.

The Business Enterprise Tax (BET)

New Hampshire also levies a Business Enterprise Tax, a low-rate tax on an enterprise's "enterprise value tax base" - broadly, compensation paid, interest paid, and dividends paid - rather than on profit. It applies once an enterprise exceeds statutory gross receipts or enterprise value tax base thresholds that the Department of Revenue Administration adjusts periodically.

For a solo self-employed person with no payroll, BET exposure is usually small or nonexistent, because the tax base is built from compensation, interest, and dividends paid out. It becomes relevant once you hire staff. BET actually paid can be credited against BPT liability, so the two taxes are coordinated rather than simply stacked. Confirm the current BET rate and thresholds with the department before assuming you are exempt.

Quarterly Estimated Payments - Federal and New Hampshire

No one withholds tax from a self-employed person's profit, so the IRS collects it through quarterly estimated payments on Form 1040-ES. Federal estimates are generally due April 15, June 15, September 15, and January 15 of the following year. Underpaying triggers an estimated-tax penalty even if the return is filed on time and the balance is paid in April.

A practical method: set aside a fixed percentage of every deposit into a separate account, and true it up each quarter as profit becomes clearer. Because self-employment tax and income tax both apply to the same profit, the set-aside percentage has to cover both. Track expenses contemporaneously - each legitimate deductible expense reduces profit, and therefore reduces self-employment tax as well as income tax.

New Hampshire has its own estimated-payment regime for business taxes. Proprietorships that expect to owe BPT or BET use Form NH-1040-ES. Because there is no state withholding on self-employment income, quarterly estimates are the only way New Hampshire collects during the year.

Does Forming an LLC Change the Answer?

Entity choice does not change self-employment tax by itself. A single-member LLC is a disregarded entity by default: the owner still files Schedule C and Schedule SE exactly as a sole proprietor does. Forming an LLC changes liability exposure and state filing duties, not the 15.3% rate. See what an LLC is.

The election that can change the math is the S corporation election on IRS Form 2553. An S corporation pays its owner-employee a reasonable salary subject to FICA and can distribute remaining profit without self-employment tax. The trade-off is payroll administration, a separate Form 1120-S return, and IRS scrutiny of whether the salary is genuinely reasonable. The election rarely pays for itself at low profit levels. Compare the options in S-corp vs LLC.

New Hampshire adds a wrinkle: a single-member LLC taxed federally as a proprietorship files the same NH-1040 that a sole proprietor files. Forming the LLC therefore does not move you out of the BPT regime. See how to form an LLC in New Hampshire, single-member LLC in New Hampshire, and S-corp election in New Hampshire.

Deductions and the Reasonable Compensation Deduction

Federally, every ordinary and necessary business expense on Schedule C reduces both self-employment tax and income tax. Retirement contributions and the self-employed health insurance deduction reduce income tax only, because they are applied after net earnings from self-employment are computed.

New Hampshire's Business Profits Tax allows a deduction for the fair and reasonable compensation of proprietors and other owners who actually work in the business, which recognizes that a proprietor's profit includes the value of their own labor. The deduction is subject to statutory limits and to the department's substantiation rules, so document the hours worked and the basis for the amount claimed. Do not assume the full profit qualifies.

Keep the two systems separate in your records. The federal Schedule C and the New Hampshire NH-1040 start from the same books but apply different adjustments, and the department can request support for the state adjustments independently of any IRS review.

Other New Hampshire Obligations to Check

New Hampshire has no general sales tax, so most self-employed people never register for one. Specific activities carry their own taxes - notably the Meals and Rentals Tax for restaurants, caterers, and short-term lodging operators, which requires a license from the Department of Revenue Administration.

If you hire employees, you register for New Hampshire unemployment insurance with New Hampshire Employment Security and obtain a federal EIN. Local requirements are separate again; see New Hampshire business license requirements. None of these replace the federal Schedule SE obligation.

Frequently Asked Questions

Does New Hampshire have a self-employment tax?

No. There is no state income tax on earned income and no state SE tax. You still pay the federal 15.3%, and the Business Profits Tax may apply at 7.5%.

When must a self-employed person file NH-1040?

When gross business income from everywhere exceeds $109,000 for periods beginning on or after January 1, 2025, and you conducted business activity in New Hampshire.

What is the Business Profits Tax rate?

7.5% for taxable periods ending on or after December 31, 2023.

How much is federal self-employment tax?

15.3% of net earnings: 12.4% Social Security up to $184,500 for 2026 and 2.9% Medicare uncapped, plus 0.9% above $200k single or $250k joint.

Does New Hampshire have a sales tax?

No general sales tax. The Meals and Rentals Tax applies to restaurants, prepared food, and short-term rentals.

Will an LLC reduce my New Hampshire taxes?

Not by itself. A single-member LLC taxed as a proprietorship files the same NH-1040 and stays in the BPT regime.

Sources

IRS - Self-employment tax (Social Security and Medicare taxes).
Social Security Administration - Contribution and Benefit Base ($184,500 for 2026).
IRS - Topic no. 751 (0.9% Additional Medicare Tax).
IRS - About Schedule SE (Form 1040).
IRS - About Form 1040-ES.
NH Department of Revenue Administration - Business Profits Tax FAQ (7.5% rate; NH-1040; $109,000 threshold).
NH Department of Revenue Administration - Business taxes at a glance (BPT and BET).
NH Department of Revenue Administration - BET and BPT filing threshold adjustment.
NH Department of Revenue Administration - 2026 NH-1040-ES instructions.
IRS - About Form 2553 (S corporation election).

LegalGlass provides general information for educational purposes and is not legal advice, is not a law firm, and is not a substitute for advice from a licensed attorney or tax professional. Laws, fees, and thresholds change; verify current amounts with the IRS and the New Hampshire Department of Revenue Administration before acting.