Meals and Rooms Tax
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 hotels, 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.