New Hampshire lowers meals and rentals tax growth due to Canadian tourism concerns

The New Hampshire House Ways and Means Committee convened on May 20, 2025, to discuss significant adjustments to the state's fiscal projections, particularly concerning the meals and rentals tax. The committee announced a reduction in the growth estimate for fiscal year 2026 from 2% to 0%. This decision stems from concerns about a potential decline in Canadian tourism, which is expected to impact revenue from meals and lodging.

Officials noted that Canadian tourists contribute approximately 5% of the meals and rooms revenue in New Hampshire. While this percentage may seem minor overall, it could have a substantial effect on certain regions, especially in the northern parts of the state that rely heavily on this influx of visitors. The committee expressed caution regarding the potential drop in Canadian visitors due to tariffs and changing perceptions of U.S. policies.

Conversely, there is an expectation that domestic travel may increase, as Americans might opt for local vacations instead of international trips. This trend could help mitigate some of the revenue losses from the anticipated decrease in Canadian tourists. The committee maintained a high growth rate estimate of 5% for the following year, suggesting that the rise in domestic tourism could balance out the losses from international visitors.

Additionally, the committee reviewed revenue estimates for business taxes and utility property taxes, noting that their projections for fiscal years 2026 and 2027 fell below the updated ranges based on April revenue data. A notable discrepancy was also highlighted regarding the interest and dividends tax revenue estimates between the House and Senate, primarily due to the repeal of this tax.

The discussions underscored the importance of monitoring tourism trends and their implications for state revenue, particularly as New Hampshire prepares for the upcoming fiscal years. The committee remains vigilant about the potential impacts on local economies that depend on tourism.