Meals and Rooms Tax

Citizens Count Editor

New Hampshire's meals and rooms tax is a 9% tax on room rentals and prepared meals. That includes some prepared, ready-to-eat foods at grocery stores like sandwiches and party platters. The tax applies to any room rentals for less than 185 consecutive days and to function rooms in any facility that also offers sleeping accommodations. There is also a 9% tax on car rentals. There are some exceptions for schools, charities and nonprofits.  

The tax is collected by hotes, restaurants, caterers and other businesses that provide these taxable goods or services. They send the money to the state. A bit of that money goes toward school building loans and tourism promotion, with 40% generally going back to towns based on their population. The rest goes to the state's general fund. 

In recent years, there have been several attempts to alter the way New Hampshire taxes rooms and meals. 

Cuts to the town share of revenue

Cities, towns and unincorporated places in New Hampshire are supposed to get 40% of the meals and rooms tax revenue, but that became less certain after the 2009 recession. Changes were made to the meals and rooms tax allocation formula that saw a smaller percentage going to towns and more money staying in the state's general fund. The most recent budget, for 2020-2021, the same flat rate as the last four years - $68.8 million - will be sent back to towns each year.

Local meals and rooms taxes

Several times in recent years, the Legislature has debated a bill that would have allowed cities and towns the option to add a local tax on meals and rooms. So far, all those bills have failed.

Changing how revenue is distributed

There have been other efforts to change how the portion of meals and rooms tax revenue going to towns is shared out. Several times in recent years, the Legislature has looked at bills that would see some or all of meals and rooms tax revenue distributed based not on a town's population, but one how much of that revenue was generated in the town. 

For example, in the 2013 legislative session, then state Sen. Nancy Stiles (R-Hampton) filed a bill, SB 121, which would have seen 56 percent of the town share of meals and rooms tax revenue still distributed based on population, but 44 percent distributed back to the towns that had raised it, based proportionally on how much revenue they generated. The bill failed.

Tourist towns argue they deserve a bigger cut because they carry a larger burden on their infrastructure from tourism. However, a redistribution could significantly hurt the budgets of communities that lack tourism. Western New Hampshire, for example, generates far less meals and rooms tax revenue than the Seacoast and the North Country, both popular tourist destinations.

LEGISLATIVE HISTORY

Passed House

Allows municipalities to collect an occupancy fee from room rentals, up to $2 per room per day, for the purpose of establishing a municipal capital fund, revolving fund, or tourism support fund.

Passed House

Allows the Department of Revenue Administration to set a window of time, up to 30 days after notice of the original tax assessment or any reissued assessment, during which, if any amount of the tax is paid, no interest shall be imposed on that amount. The bill also removes the telefile option for filing Meals and Rooms tax returns.

Killed in the Senate

Establishes a committee to study the meals and rooms tax distribution formula.

Killed in the House

Includes the sale of ski area tickets in the Meals and Rooms Tax and appropriates $500,000 or 10% of the annual amount collected, whichever is greater, from the tax on ski area tickets to the Department of Corrections for funding college and vocational courses for inmates. All remaining money would be deposited in the Governor's Scholarship Fund for the working families scholarship program. This bill also allows the Liquor Commission to contract with ski areas to sell tickets at state liquor stores.

Killed in the House

Reduces the Meals and Rooms Tax short-term rental operators get to keep, from 3% percent to 1.5%. The remaining 1.5% would go to the Affordable Housing Fund.

Passed House

Clarifies that an app, website or other online system that facilities vehicle or room rentals is responsible for collecting the meals and rooms tax.

Killed in the House

Caps how much operators may keep of meals and rooms tax revenue to $100 per month, and sends the revenue operators would otherwise keep to school building aid.

Tabled in the Senate

Allows municipalities to collect an occupancy fee from room rentals, up to $2 per room per day, for the purpose of establishing a municipal capital fund or tourism support fund.

Killed in the House

Clarifies who is responsible for paying meals and rooms tax for short-term rentals, such as those made through Airbnb.

Signed by Governor

According to the Department of Revenue Administration, this bill "simplifies, clarifies and modernizes the Meals and Rooms Tax law" without changing who must pay meals and rooms taxes.

Killed in the House

Excludes occupancies of 30 days or more from the meals and rooms tax. At the time of this bill's submission, occupancies of 185 days or more are excluded from the tax.

Killed in the House

Requires the Department of Revenue Administration to distribute a portion of meals and rooms tax revenue back to towns and cities in proportion to amount of that revenue collected within each town or city.

Killed in the House

Clarifies existing law relative to the meals and rentals tax for online travel companies, accommodation marketplaces, or any other third-party agent, or other arrangement giving a person the ability or authority to engage in the sale of taxable accommodations ("room remarketers").

Interim Study

Modifies the meals and rooms tax to include "the prearrangement of motor vehicle rentals with an online enabled technology application service, website, or system."

Killed in the House

Allows towns and cities to adopt an additional surcharge under the meals and rooms tax, up to $2 per occupancy per day at a hotel.

Killed in the House

Requires a portion of meals and room tax revenue to be credited to the Fish and Game search and rescue fund.

Killed in the House

Caps the amount businesses may retain from the meals and rooms tax, to $100 per month. Any extra revenue the state receives from this change would go to school building aid.

Killed in the House

Requires the Department of Revenue Administration to distribute a portion of the revenue collected from occupancies under the meals and rooms tax to towns and cities in proportion to the total amount of such taxes collected in the state.

Signed by Governor

Limits how much municipalities can regulate short-term rentals, and allows a "lodging marketplace" - such as Airbnb - to be licensed by the state to collect meals and rooms taxes on behalf of vacation and short-term rentals. The bill was amended to instead establish a committee to study the regulation and taxation of vacation rentals and short-term rentals. A conference committee added back in limits on local regulation of short-term rentals.

Killed in the House

Requires the Department of Revenue Administration to collect and publicly report the amount of meals and room tax revenues collected in each city or town.

Killed in the Senate

Requires the Department of Revenue Administration to report to cities and towns the amount of meals and room tax revenues collected in the city or town.

Signed by Governor

Requires advertisements of short-term rentals to display the meals and rooms license number of the operator. Short-term rentals - for example through Airbnb - are already required to register and pay meals and rooms tax, but many do not.

Signed by Governor

Allows municipalities to regulate short-term rental businesses. An amendment revised the bill to establish a committee to study the effect of short-term rentals on municipalities.

Interim Study

Requires an operator under the meals and rooms tax who rents rooms in a hotel or hotels with more than one physical address under a single license to provide the Department of Revenue Administration with a schedule of the physical address of each hotel.

Interim Study

Requires the Department of Revenue Administration to distribute a portion of meals and rooms tax collected to towns and cities.

Killed in the House

Allows towns and cities to adopt an additional surcharge under the meals and rooms tax on hotel occupancy.

Killed in the House

Repeals the provision allowing operators to retain 3% of meals and rooms taxes collected. The bill continually appropriates 3% of meals and rooms tax revenues to school building aid. The Department of Revenue Administration estimates this would provide roughly $8 million for school building aid.

Signed by Governor

Originally written to add the distribution of 1% of the net income from the meals and rooms tax to towns and cities in proportion to the amount collected within such town or city.  The Senate amended the bill to instead establish a committee to study the formula for distribution of meals and rooms tax revenues.

Tabled in the Senate

Permits municipalities to adopt ordinances to assess hotel occupancy fees for the use of municipal services (not to exceed $1 per unit per night).

Killed in the House

Decreases the meals and rooms tax.

Signed by Governor

Makes administrative changes to the meals and rooms tax, and establishes requirements and procedures for a municipality to calculate and set the applicable tax rates for property taxes.

Killed in the Senate

Distributes meals and rooms tax revenue to municipalities according to how much revenue came from each municipality.

Died in Conference Committee

Makes various regulatory changes, such as allowing towns to adopt a local meals and rooms tax in addition to the state meals and rooms tax and authorizing expanded gambling.

Should NH revise the meals and rooms tax?

AGAINST
REPRESENTATIVES

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Issue Status

The Legislature is debating different ways of giving the towns that generate meals and rooms tax revenue a bigger cut of the pie. One option would see 1/9th of the meals and rooms tax collected stay in the city or town where the business is located. Another would let cities and towns create their own occupancy fee on room rentals. Check the list of bills on this page for more info and the latest updates. Contact your elected officials to share your thoughts. 

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