In the following article, ATR’s Grover Norquist lays out the case for doing away with the interest and dividends tax. This is a tax the state imposes on money for which you’ve already paid taxes but is now making gains either in the bank or as the result of another type of investment.
This tax hurts seniors, especially those who live off our savings.
“NEW HAMPSHIRE is often said to be a no income tax state. But that is not exactly true.
While the Granite State does boast the absence of a tax on wage income, it still imposes a 5% tax on income earned from interest and dividends.”
Currently, Representative Norman Silber (R) of Belknap – District 2 has proposed a bill that should be supported: HOUSE BILL 568-FN-A – AN ACT increasing exemptions to the interest and dividends tax and repealing the tax in 2025.
HB 568 repeals the interest and dividends tax, RSA 77, effective January 1, 2025, and increases the exemptions for taxpayers each year prior to the repeal.
But during the Reagan administration another more egregious federal law was made… it’s called the ‘double dipping’ law. The problem with this optional law is that it is not fairly applied to all those who receive pensions.
In many cases the law penalizes widows and widowers by denying them their portion of their late spouse’s Social Security. If the surviving spouse gets a small pension from a ‘government” job, such as teaching for example, and if that survivor didn’t put in for Social Security for themselves, they are denied all of the money that would have been their portion of their spouse’s Social Security contributions. In most cases the deceased spouse’s contributions are lost forever and never benefit anyone in the deceased person’s family. Typically this could be as much as $2,200 a month.
If the federal law is to be changed, the surviving spouse could be means tested. For example if they are currently making over $50,000/year they could get a reduced amount. But anyone making under 50,000/year should benefit from the whole 2/3 which would normally be due them.
Since sates were not required to adopt this law, Pennsylvania and New York did not. But New Hampshire and Massachusetts did. So if you live or work in Massachusetts or New Hampshire you could be losing as much is $2,200 a month — money the government took that won’t ever benefit you or anyone else in your family.
This law does not apply to private pensions which means a surviving spouse could be making $100,000/year or more and still collect their share of their late spouse’s Social Security.
It’s time we not only stop double-taxing seniors with the dividends and interest tax but we give surviving spouses their fair share of money that was the result of their late partner’s lifetime contributions, especially when their own pensions are so minimal. They should be awarded this money regardless of where they contributed to their own pensions.
The states of NH and Mass could follow PA and NY and simply reject the imposition of this rule. Since the money was fairly contributed by the deceased earner for the benefit of his or her survivors, it can hardly be considered ‘double dipping’.