Signing the New Hampshire 2022-2023 Budget
We worked in the 2021 legislative session to provide property tax relief to the citizens of New Hampshire. For the most part the State doesn’t have much direct control over property tax rates. Property taxes are based on the spending that the residents of each town vote for. One component of the property tax is the statewide property tax and this is a tax the State can control directly.
The New Hampshire statewide property tax will be eliminated for the year 2022. The first thing to understand is that this will have NO effect on education funding in the State.
You can see how this will impact you in tax year 2022 by looking at a recent real estate property tax bill from your town. You will note that there are four components to the tax rate applied to your property assessment: County, School, Town, and State Education. In 2022 the State Education rate will be $0.00 (zero). The State Education rate on your bill is specified as dollars per thousand dollars of valuation. Divide the Total Assessments on your bill by 1000 and then multiply that by the State Education rate on your bill. Your tax bill will be reduced by approximately this amount in 2022. The exact amount of the reduction depends on the actual valuation of your property in 2022 relative to all the other properties in your town.
In a typical year the State Education rate is set to generate $363 million. The rate is determined by dividing $363M by the total assessed value of all property in the State. The other side of the equation is the formula that determines how much each school system receives from the State.
In fact, no money actually transfers from the towns that are collecting the property taxes to the State. If a town collects more revenue than the State is calculated to receive then it keeps the excess. If it collects less then the State transfers money from the State’s Education Trust Fund to the town and then on to the school district(s).
In 2022 the same calculations will be done. In this case the towns won’t collect any money from the State Education part of the tax bill. The State will transfer funds to all towns the amount determined by the formula used every year for the calculation. This money will come from a combination of the Education Trust Fund and the General Fund of the State.
In 2023 the process reverts to what it is now where the State Education rate is set and the towns collect the revenue.