State finances received some generally positive news last month. The preliminary analysis of New Hampshire revenues for the fiscal year that ended June 30 showed collections were higher than expected. Combined revenues for two key state funds, the General Fund and the Education Trust Fund, were 5.5%, or $170 million, above target amounts set by state budget writers in 2025. Revenue also grew 5.4% over last year. After collections fell short of expectations early in the year, this end-of-year revenue surplus was far from certain. A closer look at the revenue sources driving the growth presents a more complex picture of revenue collections.
About $98.8 million of that $170 million surplus (58.1%) was from a one-time tax amnesty program that policymakers forecast would generate much less revenue than it actually did. That windfall from previously unpaid taxes cannot be repeated soon.
Other revenue sources still generated a surplus in aggregate, but key specific sources lagged inflation and prior collections. Combined business tax revenues were 2.7% higher in State Fiscal Year (SFY) 2026 than in the year before, and total Meals and Rentals Tax revenues were up 2.6%. While these tax revenue sources grew, they were both behind overall consumer inflation in New England between the two fiscal years (3.1%) and fell short of their average annual growth rates during the SFYs 2018 to 2025 period (5.0% and 4.9%, respectively). Business taxes were also still 10.6% lower, unadjusted for inflation, than their recent peak in SFY 2023.
Liquor Commission profits and Tobacco Tax revenues were effectively flat relative to the year before, which is an improvement from their declining long-term trends. Real Estate Transfer Tax revenues are rebounding, as house sales have increased this year and prices have reached new records.
Revenue growth stemmed from three other primary sources, all of which reflect trends in both the economy and public policy. Total Insurance Premium Tax revenues were up 7.2%, likely reflecting higher insurance costs for policyholders. Medicaid Enhancement Tax collections increased 16.1%; this tax on hospitals, based on net revenue collected from patient services, became the state’s third-largest tax last year. Both these revenue streams reflect, among other trends, higher healthcare costs. Finally, Lottery and Gaming Commission profits grew 20%, reflecting recent changes that legalized more gambling, increasing the state’s reliance on these revenues.
The state’s traditional workhorse revenue sources are falling short of the inflation rate, suggesting they are not keeping pace with the rising costs of delivering public services. Other revenue sources came to the rescue last fiscal year, but much of that growth was based on higher costs for Granite Staters, including health and housing costs, as well as increased reliance on gambling revenues. These trends all suggest that last year’s revenue surplus may provide limited reassurance about the state’s fiscal outlook.
Phil Sletten is research director for the NH Fiscal Policy Institute. The NHFPI Policy Memo is a partnership of the NH Fiscal Policy Institute and NH Business Review.
State finances received some generally positive news last month. The preliminary analysis of New Hampshire revenues for the fiscal year that ended June 30 showed collections were higher than expected.
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