New Hampshire is one of five US states with no statewide sales tax. Instead, the state has business-specific taxes that account for an estimated 39% of state revenue. A New Hampshire sales tax exemption often refers to an exemption for the Meals and Rooms (Rentals) Tax (M&R) that applies only to certain restaurant, hotel, and car rental transactions.

Below, we'll cover what a New Hampshire sales tax exemption entails, who can qualify for an exemption, and what New Hampshire businesses must watch for when selling across state lines.

Key takeaways

• Because New Hampshire has no general statewide sales tax, the state has no general sales tax exemptions.

• Restaurants, hotels, and car rental businesses in New Hampshire must collect a Meals and Rooms (Rentals) Tax (M&R) that functions much like sales tax elsewhere.

• New Hampshire businesses selling into other states still must track economic nexus thresholds in each state where they do business.

What is a New Hampshire sales tax exemption?

A New Hampshire sales tax exemption isn't generally applicable because there's no statewide sales tax. New Hampshire has an 8.5% M&R tax on prepared meals, hotel and short-term rental stays, and motor vehicle rentals. This works similarly to a sales tax for those types of transactions. Restaurants, hotels, and car rental businesses collect and remit this tax to the state tax authority. New Hampshire allows certain tax exemptions related to the M&R tax.

Who qualifies for a New Hampshire sales tax exemption?

The M&R tax applies only to certain transactions in the hospitality sector. The state does offer other specific exemptions, including:

• Federal, state, county, and municipal government employees: Meal purchases made on official government business with the required government payment method (e.g., Treasury check, county/municipal treasurer's check, government-issued credit card) are exempt.

• Diplomatic officials: Diplomats with a valid diplomatic tax-exemption card issued by the US Department of State or the American Institute in Taiwan might be exempt from taxes on meals depending on what the card authorises.

• Certain schools and students: The New Hampshire Department of Revenue Administration (NHDRA) identifies qualifying schools and students for limited exemptions.

• Recipients of food stamps: The portion of meals purchased with nutrition assistance benefits is tax-exempt.

• Disaster victims: Room rentals resulting from the partial or complete destruction of a person's permanent residence can qualify for an exemption.

New Hampshire doesn't issue a blanket exemption for non-profits or exemption certificates for M&R tax. The exemptions above apply as described, and the scope can vary by transaction type. If you're a hotel, restaurant, or other M&R tax operator, you should keep records supporting any exempt transaction, such as guest checks, folios, registration cards, rental agreements, and other relevant business records. The exemption must fall within a specific regulatory category and be supported by documentation.

How does New Hampshire's lack of sales tax affect out-of-state and online sellers?

A New Hampshire-based business selling into other states must track economic nexus thresholds by state to know when it must begin collecting sales tax. Nexus thresholds are typically based on revenue and/or transaction volume in each state regardless of where the seller is. The requirement can catch New Hampshire businesses off guard the first time they cross a nexus threshold in another state because they have not had to consider sales tax collection in New Hampshire. Broader sales tax exemptions can apply when a business based in New Hampshire ships goods to a customer in a state that does charge sales tax.

Here are two situations in which a tax exemption might arise:

• Selling to resellers in other states: A New Hampshire business shipping inventory to a retailer in Massachusetts might need to collect a resale certificate from that customer to avoid charging Massachusetts sales tax.

• Selling to non-profits or government customers elsewhere: A tax-exempt sale to a qualifying non-profit or government entity in another state will require that state's specific exemption certificate.

A tax tool such as Stripe Tax simplifies sales tax management across state lines by letting businesses set up tax exemptions for specific customers or products that apply automatically at checkout. You still need to collect and store the appropriate sales tax exemption certificates, but Stripe Tax removes the manual work of applying the exemptions to each sale.

How Stripe Tax can help

Stripe Tax reduces the complexity of tax compliance so you can focus on growing your business. Start collecting taxes globally by adding a single line of code to your existing integration, clicking a button in the Dashboard, or using our powerful application programming interface (API).

Stripe Tax helps you monitor your obligations and alerts you when you exceed a tax registration threshold based on your Stripe transactions. It can also register to collect tax on your behalf in the US, automate US filings in the Dashboard, and manage global filings through trusted partners. Stripe Tax automatically calculates and collects sales tax, value-added tax (VAT), and goods and services tax (GST) on:

• Digital goods and services in all US states and over 100 countries
  
• Physical goods in all US states and 42 countries
  

Stripe Tax can help you:

• Understand where to register and collect taxes: See where you need to collect taxes based on your Stripe transactions. After you register, switch on tax collection in a new state or country in seconds. You can start collecting taxes by adding one line of code to your existing Stripe integration, or add tax collection with the click of a button in the Stripe Dashboard.

• Register to pay tax: If you need to register for a sales tax in the US, let Stripe manage your tax registrations. You'll benefit from a simplified process that prefills application details – saving you time and simplifying compliance with local regulations. If you need help registering outside of the US, Stripe partners with Taxually to help you register with local tax authorities.

• Automatically collect tax: Stripe Tax calculates and collects the right amount of tax owed, no matter what or where you sell. It supports hundreds of products and services and is up-to-date on tax rules and rate changes.

• Simplify filing: Stripe Tax automates US filings in the Dashboard, powered by TaxJar. For global filings, Stripe Tax seamlessly integrates with filing partners, so your global filings are accurate and timely. Let our partners manage your filings so you can focus on growing your business.

Learn more about Stripe Tax or get started today.

FAQs about New Hampshire sales tax exemptions