While the Granite State proudly touts tax-free shopping, food businesses face a different reality. The distinction between tax-free groceries and taxable prepared meals creates compliance complexity that catches restaurants, grocery stores, and caterers off guard.
Misclassifying a single sandwich can trigger audits and penalties far exceeding the original tax obligation.
Hands Off Sales Tax (HOST) helps businesses operating across multiple states understand exactly where obligations exist, including specialized taxes like New Hampshire’s Meals and Rentals Tax. With 25+ years managing sales tax compliance, we ensure you collect correctly without diverting focus from growth.
Understanding New Hampshire’s Unique Tax Structure
New Hampshire operates as one of five U.S. states with no general statewide sales tax, according to the New Hampshire Department of Revenue Administration. Consumers purchasing clothing, electronics, or furniture pay zero sales tax at checkout.
This creates a powerful advantage for retailers, especially near the Massachusetts border where shoppers escape the 6.25% sales tax.
However, New Hampshire’s tax-free status doesn’t extend to prepared foods. The state generates significant revenue through its Meals and Rentals Tax (M&R Tax), which specifically targets hospitality and food service.
The Meals and Rentals Tax: New Hampshire’s Exception
The Meals and Rentals Tax applies at 8.5% to specific services, according to the New Hampshire DRA:
- Restaurant meals and prepared food
- Hotel accommodations (rentals under 185 consecutive days)
- Motor vehicle rentals
- Function rooms at facilities offering sleeping accommodations
The current 8.5% rate took effect October 1, 2021, when the state reduced it from the previous 9% rate per Citizens Count. Unlike many states, New Hampshire does not authorize local option meals taxes, maintaining statewide uniformity at the 8.5% rate.
For food businesses, the critical compliance challenge centers on correctly distinguishing between tax-exempt groceries and taxable prepared meals.
What Foods Are Subject to NH Sales Tax?
New Hampshire’s tax treatment creates two distinct categories: tax-free groceries and taxable prepared foods.
Tax-Free Groceries (No Tax)
Basic grocery items remain completely exempt. According to NH guidance, the following are NOT taxable:
- Wholly packaged food products and beverages
- Pre-packaged deli items (sealed, not made fresh)
- Pre-packaged bakery items
- Single serving and whole bakery products
- Raw ingredients for home cooking
- Dairy, bread, fruits, vegetables, and meat
A customer purchasing bread, milk, or packaged deli meat pays zero tax.
Taxable Prepared Foods (8.5% Tax)
The Meals and Rentals Tax applies to “food prepared on the premises” that could reasonably compete with restaurants, according to Technical Information Release TIR 2007-005.
Taxable prepared foods include:
- Sandwiches made fresh at the store
- Hot food items (rotisserie chicken, hot pizza slices, soup bars)
- Salad bars and self-serve food carts
- Beverages in unsealed containers (fountain drinks, fresh juice)
- Party platters (prepared veggie trays, meat and cheese platters)
- Prepared ready-to-eat products that compete with restaurants
The tax applies to meals costing $0.36 or more under RSA 78-A, meaning virtually all prepared foods trigger the tax.
Industry-Specific Guidance: How the Tax Applies to Your Business
Different food businesses face unique compliance considerations based on their business model.
Coffee Shops and Cafés
Tax-Free: Whole coffee beans, ground coffee sold by the bag, packaged tea, retail merchandise
Taxable at 8.5%: Brewed coffee, espresso drinks, fresh-squeezed juice, smoothies, pastries for immediate consumption
Real Example: A customer buys a 12-oz bag of whole beans ($15) and a latte ($5). The beans are tax-free. The latte incurs $0.43 tax. Total: $20.43.
Bakeries
Tax-Free: Whole cakes, multi-serving pies, packaged cookies (6+ count), bread loaves
Taxable at 8.5%: Single donuts, individual cupcakes, slices of cake, cookies sold individually for immediate consumption
The Key Distinction: Intent matters. A whole cake clearly for later consumption remains tax-free. Individual items consumed on-premises or immediately are taxed.
Food Trucks and Mobile Vendors
All prepared food you serve is taxable at 8.5%. This includes:
- Tacos, sandwiches, wraps
- Hot dogs, burgers, grilled items
- Fried foods, pizza slices
- Any beverage served
Registration Requirement: You must obtain a Meals Tax license before your first sale, even if operating at temporary events or farmers markets.
Grocery Stores with Deli Departments
This creates the most compliance complexity because you’re operating two businesses under one roof.
Tax-Free Zone:
- Packaged deli meats and cheeses (sliced to order but wrapped for later)
- Whole rotisserie chickens sold cold
- Pre-packaged salads sealed by manufacturer
8.5% Tax Zone:
- Custom sandwiches made at deli counter
- Hot rotisserie chickens from warming case
- Salad bar charged by weight
- Party platters assembled in-store
Critical Compliance Point: Your POS system must distinguish between these categories. Misconfiguring your system to apply 8.5% to sliced deli meat (which should be tax-free) overcharges customers and creates reconciliation nightmares during audits.
Catering Businesses
All catering services are taxable at 8.5%, including:
- Food prepared and delivered
- Food prepared and served at events
- Rentals of equipment (chafing dishes, tables) when bundled with food service
Does not matter: Whether the event is on-premises or off-premises. If you’re preparing and serving food, you’re collecting Meals Tax.
NH Meals Tax Registration: Complete Walkthrough
Before you serve your first prepared meal, you need a Meals and Rentals Tax license. Here’s exactly how to get one.
What You’ll Need Before Starting
Gather these documents and information:
- Federal Employer Identification Number (FEIN) or Social Security Number
- Business legal name and DBA (if applicable)
- Physical business address (not a PO Box)
- Mailing address if different
- Business structure (LLC, Corporation, Sole Proprietor)
- Estimated monthly prepared food sales
- Business bank account information
- Start date for serving prepared food
Registration Process: Step-by-Step
Step 1: Access Granite Tax Connect (GTC)
- Navigate to www.revenue.nh.gov/gtc
- Click “Register New Account”
- Create your username and secure password
- Verify your email address
Step 2: Complete the Meals & Rentals Tax Application
- Select “Meals and Rooms (Rentals) Tax License”
- Enter your FEIN or SSN
- Provide business name and address details
- Specify your business type (restaurant, caterer, grocery with deli, etc.)
- Estimate your monthly taxable sales
Step 3: Submit and Receive Confirmation
- Review all information carefully
- Submit electronically (no paper filing required)
- Important: There is NO registration fee for Meals Tax license
- You’ll receive a 6-digit license number immediately via email
- License must be displayed at your business location
Timeline: Registration is processed immediately online. You can begin collecting tax as soon as you receive your license number.
After Registration: What Happens Next
Filing Frequency Assignment: NH DRA will assign you a filing frequency based on your estimated tax liability:
- Monthly: Expected tax liability over $100/month
- Quarterly: Expected tax liability $25-$100/month
- Annually: Expected tax liability under $25/month
Most food businesses file monthly.
First Filing Due Date: The 15th day of the month following your first taxable period. If you start serving prepared food on January 15th, your first return covers January 15-31 and is due February 15th.
How to File NH Meals Tax: Monthly Compliance
Filing happens entirely through Granite Tax Connect. Here’s the complete process.
Calculating What You Owe
Step 1: Total Your Prepared Food Sales Track all taxable prepared food sales for the month. Example: $12,000 in prepared food sales.
Step 2: Calculate Tax Collected If tax is excluded from your prices: $12,000 × 0.085 = $1,020 tax collected If tax is included in your prices: $12,000 × 0.07834 = $940.08 tax portion
Step 3: Calculate Your Commission (If Eligible) Operators who file on time and comply with all requirements can retain 3% as commission for collecting the tax.
$1,020 × 0.03 = $30.60 commission
Step 4: Calculate Amount Due $1,020 – $30.60 = $989.40 due to NH DRA
Filing in Granite Tax Connect
Log in to your GTC account using your license number and password.
Navigate to “File Return” → Select “Meals & Rentals Tax”
Complete the return:
- Line 1: Enter gross receipts (if tax excluded from price)
- Line 2: Multiply Line 1 × 0.085
- Line 5: Enter total meals tax
- Line 12: Total tax due before commission
- Line 13: Enter 3% commission (if eligible)
- Line 19: Net amount due after commission
Submit payment electronically via:
- ACH debit (recommended—fastest)
- Credit card (processing fees apply)
Save confirmation number for your records (required 3-year retention).
Common Filing Errors to Avoid
Forgetting Zero-Return Filings: Even months with no sales require filing. Failure to file a zero-return triggers penalties.
Miscalculating Commission: You only get the 3% commission if you file on time and comply with all requirements. Late filers forfeit the commission entirely.
Mixing Tax-Included and Tax-Excluded Sales: Use the correct multiplier. Tax-excluded uses 0.085. Tax-included uses 0.07834. Using the wrong multiplier creates reconciliation problems.
Not Keeping Supporting Documentation: NH DRA requires 3-year retention of all sales records, cash register tapes, and worksheets. Missing documentation during an audit means assessments based on estimates, which are never in your favor.
Penalty Structure and How to Avoid Audits
Understanding penalties helps you appreciate the cost of non-compliance.
NH Meals Tax Penalties
Late Filing: 10% of tax due, minimum $10
- File by the 15th every month. Miss it by one day, you’re paying a 10% penalty.
Late Payment: 10% of unpaid tax amount
- Even if you file on time, failure to pay triggers this penalty
Substantial Understatement: 25% penalty
- Applies when you understate tax by more than $5,000 OR more than 10% of correct liability
- Example: Actual tax due was $12,000. You reported $10,000. That’s a $2,000 understatement (16.7%), triggering 25% penalty on the $2,000 = $500 additional penalty
Interest Charges: Daily compounding at 0.00074 rate (2025)
- Calculated from original due date until paid
- 30 days late on $1,000 = approximately $22.20 interest
- 90 days late on $1,000 = approximately $66.60 interest
Failure to Collect Tax: Class B Felony
- Intentionally not collecting tax from customers is criminal fraud
- Maximum penalties include imprisonment
What Triggers NH Meals Tax Audits
Inconsistent Reporting: Sales jump dramatically month-to-month without explanation. Sudden drops in reported sales while marketing indicates growth.
Missing Zero-Returns: Failing to file during supposedly “closed” months or slow seasons.
Customer Complaints: Customers reporting they weren’t charged tax, or were charged incorrect amounts.
Whistleblower Reports: Disgruntled employees reporting non-compliance.
Industry Sweeps: NH DRA periodically audits entire industries (restaurants, caterers, food trucks) in concentrated campaigns.
Random Selection: Small percentage of returns are randomly audited each year.
How to Stay Off the Audit List
File every return on time: Set calendar reminders for the 14th of each month. Never miss a deadline.
Maintain consistent reporting: Large fluctuations require documentation explaining seasonality, one-time events, or business changes.
Keep immaculate records: 3-year retention minimum. Cash register tapes, invoices, bank statements, sales summaries.
Respond immediately to notices: NH DRA sends notices for minor discrepancies. Ignoring them escalates to audits.
Train staff properly: Ensure everyone knows which items are taxable and how to ring them up correctly.
Multi-State Compliance Complexity
For businesses operating in New Hampshire and other states, compliance becomes exponentially complex.
Border State Comparison Table
| State | Prepared Food Tax | Grocery Tax | Key Differences |
| New Hampshire | 8.5% | 0% | Only prepared food taxed; no local variations |
| Massachusetts | 6.25% | 0% | All prepared food taxed; groceries exempt |
| Vermont | 9% | 0% | Meals tax + 6% general sales tax; prepared food gets meals rate |
| Maine | 8% | 5.5% | Prepared food at 8%; groceries at reduced 5.5% |
Implication for Regional Businesses: A restaurant chain operating in Manchester, NH and Burlington, VT must:
- Collect 8.5% in NH locations
- Collect 9% in VT locations
- File separate monthly returns to each state
- Maintain separate records for each jurisdiction
- Navigate different definitions of “prepared food”
- Track different exemption rules
This is where multi-state expertise becomes critical.
Hands Off Sales Tax (HOST) manages multi-state sales tax compliance so you can focus on operations rather than decoding tax codes. We handle registrations, filings, and ongoing obligations in all states where you have nexus, including specialized taxes like New Hampshire’s Meals and Rentals Tax.
When Businesses Need Expert Help
New Hampshire’s tax structure appears simple on the surface, with no sales tax except on prepared meals. The reality involves nuanced distinctions that create compliance risk.
Businesses should seek expert guidance when:
- Expanding operations to include prepared food service
- Operating in multiple states with varying food tax rules
- Receiving notices from the New Hampshire Department of Revenue
- Facing audits or assessment of back taxes
- Uncertain about product classification
- Struggling with POS system configuration for proper tax treatment
- Missing filing deadlines and facing penalties
HOST provides specialized sales tax services that go beyond New Hampshire:
- Nexus Analysis: We analyze your footprint across all states to determine where you have obligations
- Sales Tax Registration: We handle registrations in every applicable jurisdiction, including NH Meals Tax
- Sales Tax Filings: We prepare and file returns in all states monthly, quarterly, and annually
- Notice Management: We interpret and respond to state notices on your behalf
- Audit Defense: We organize documentation and defend your position during audits
- Voluntary Disclosure Agreements: If you’ve discovered past obligations, we file VDAs to limit lookback and abate penalties
Through our parent company TaxMatrix, we’ve helped North America’s largest companies manage sales tax requirements. Now we bring that expertise to small and mid-sized businesses navigating multi-state compliance.
Get New Hampshire Sales Tax Right
Tax compliance shouldn’t drain your time or create constant stress. Whether you’re operating exclusively in New Hampshire or managing multi-state obligations, the right partner ensures you collect correctly in every jurisdiction.
HOST handles the complexity so you can focus on serving great food and growing your business. With transparent pricing, expert guidance, and comprehensive service, we take sales tax completely off your plate.
Contact HOST today to discuss your compliance needs or schedule a free consultation. Let us handle the tax so you can handle the sales.
Want to learn more? Get our “10 Sales Tax Mistakes E-Commerce Sellers Make” e-book.
Frequently Asked Questions
Does New Hampshire have sales tax on groceries?
No. New Hampshire has no general sales tax, and groceries remain completely tax-free according to the New Hampshire Department of Revenue Administration.
What is the NH meals tax rate in 2025?
The New Hampshire Meals and Rentals Tax is 8.5% as of 2025, reduced from 9% in October 2021 per the NH DRA.
Are deli sandwiches taxable in New Hampshire?
Yes. Fresh-made sandwiches prepared on-premises are subject to the 8.5% Meals Tax because they compete with restaurants, according to TIR 2007-005. Pre-packaged sandwiches sealed by manufacturers remain tax-free.
Do I need to register for NH sales tax if I only sell packaged food?
No. Businesses selling only pre-packaged groceries have no registration obligation because groceries aren’t taxed. Registration becomes mandatory only when serving prepared meals.
How does NH meals tax work for grocery stores with delis?
Grocery stores must distinguish between tax-exempt groceries and taxable prepared foods. Raw ingredients and pre-packaged items remain tax-free, while fresh-prepared items like sandwiches, hot food, and party platters trigger the 8.5% tax per Commenda.
What happens if I don’t collect NH meals tax when required?
Operating without proper licensing or failing to collect required Meals Tax exposes businesses to audits, back tax assessments, penalties, and interest. The New Hampshire Department of Revenue can assess uncollected taxes and impose penalties that significantly exceed the original obligation.
Can I keep part of the meals tax I collect?
Yes. Operators who file on time and comply with all requirements can retain 3% of collected tax as commission for serving as collection agents. Late filers or non-compliant businesses forfeit this commission entirely.
How long do I need to keep meals tax records?
New Hampshire requires 3-year retention of all records from the due date of the return or the date filed, whichever is later. This includes sales records, cash register tapes, worksheets, bank statements, and filed return confirmations.
