Starting a business is an exciting venture, but choosing the right state can have a major impact on your success. Massachusetts and New Hampshire both offer unique advantages for entrepreneurs, but depending on your industry, tax preferences, and long-term goals, one may be a better fit than the other.
Business Taxes
One of the most significant differences between MA and NH is taxation. “For traditional corporations, the corporate excise tax generally is the sum of an 8.00% tax on income attributable to Massachusetts and a tax of $2.60 per $1,000 of the greater of either taxable Massachusetts tangible personal property or taxable net worth. There is a minimum excise tax for corporations of $456” (Massachusetts Taxpayers Foundation), and most taxpayers will pay 5% flat income tax. Meanwhile, New Hampshire boasts no state income tax and no sales tax, making it attractive for businesses that want to maximize their profits.
However, NH does have two key business taxes you should keep in mind:
Business Profits Tax (BPT)
What is BPT?
Business Profits Tax is a tax on a company’s net income, and is calculated after allowable deductions. As of February 2025, NH’s BPT rate is 7.5%.
Who has to file?
“For taxable periods beginning on or after January 1, 2025, every business organization with gross business income from all business activities of more than $109,000 must file a BPT return. The filing threshold is adjusted biennially” (New Hampshire Department of Revenue Administration).
Business Enterprise Tax (BET)
What is BET?
Business Enterprise Tax (BET) is a tax on the enterprise value of a business, rather than just its profits. It is often calculated based on a combination of factors such as total compensation paid, interest expenses, and dividends, rather than just net income. As of February 2025, NH’s BET rate is .55%.
Who has to file?
“For taxable periods beginning on or after January 1, 2025, every business enterprise with more than $298,000 of gross receipts from all activities, or an enterprise value tax base of more than $298,000, must file a BET return” (New Hampshire Department of Revenue Administration).
In contrast, MA businesses benefit from a more predictable tax environment, but higher tax rates might eat into profits for certain industries.
Cost of Living and Doing Business
Massachusetts, particularly in areas like Boston, has a much higher cost of living and real estate prices. Renting office space or hiring employees in MA will generally cost more than in NH.
New Hampshire, on the other hand, has a lower overall cost of living and more affordable real estate, which can be a major advantage for startups looking to keep overhead low.
As of February 2025, the cost of living in Boston, MA is 46% higher than the national average. Conversely, the cost of living in New Hampshire’s most populated city, Manchester, is 14% higher than the national average.
Workforce and Population
Massachusetts, as a larger state with a bigger population, offers a highly skilled workforce due to its numerous universities, research institutions, and established industries. Sectors like tech, biotech, healthcare, and finance thrive here, making it easier for businesses to find specialized talent.
New Hampshire, while significantly smaller in population, provides a business-friendly environment and a strong workforce across various industries. Its lower cost of living and higher quality of life can attract employees who prefer a less congested setting while still offering access to a skilled labor force. NH’s smaller size also allows for a more tight-knit business community and networking opportunities that can benefit growing businesses.
Business Regulations and Ease of Starting Up
New Hampshire is frequently ranked as one of the most business-friendly states, thanks to its low tax burden and fewer regulations. There are no sales taxes, which makes retail businesses particularly attractive.
Massachusetts, while having a strong economy, does have stricter regulations in many industries, particularly in healthcare, finance, and environmental compliance. While this can ensure consumer protection and higher standards, it may also mean more bureaucracy and compliance costs for businesses.
Access to Capital and Networking Opportunities
Massachusetts has a thriving startup ecosystem, with access to venture capital, angel investors, and networking opportunities. Boston, Cambridge, and surrounding areas have a well-established entrepreneurial community, making it easier for startups to secure funding and strategic partnerships.
New Hampshire, while growing in this area, doesn’t have the same level of venture capital funding or startup incubators. However, it offers a supportive small business community and local funding opportunities through state programs.
Industry Considerations
Some industries thrive better in one state over the other:
Tech & Biotech
- Massachusetts is the winner, given its research institutions and access to venture capital.
Retail & Hospitality
- New Hampshire’s lack of sales tax makes it highly attractive for these businesses.
Manufacturing
- New Hampshire’s lower cost of operations makes it a solid choice.
Finance & Healthcare
- Massachusetts has stronger industry hubs and professional networks.
Final Verdict: Which State is Best for Your Business?
If you want lower taxes, fewer regulations, and lower costs, NH is likely the better choice. If you need a highly skilled workforce, access to capital, and a strong industry network, MA is probably the better option for your business.
Ultimately, your choice depends on your business model, industry, and growth strategy. Massachusetts is great for scaling and innovation, while New Hampshire is ideal for keeping costs low and maintaining flexibility. Carefully consider these factors before deciding where to set up shop!
