NH Democrats Push to Raise Meals and Rooms Tax and Expand it to Cars

Concord, NH — New Hampshire Democrats are advancing several proposals that would expand and raise the state’s Meals and Rooms Tax, including a controversial measure to apply the tax to certain motor vehicles — a move critics say amounts to a direct tax hike on New Hampshire's families.

One bill, introduced by Rep. Michael Cahill (D–Newmarket), seeks to raise the overall Meals and Rooms Tax rate, reversing prior Republican-led reductions that helped the hospitality industry grow and expanded job creation in New Hampshire.

Another measurer, filed by Rep. Peter Petrigno (D–Milford), would reduce the percentage of Meals and Rooms Tax revenue that businesses are allowed to retain to offset collection costs — meaning more tax dollars would flow to the state and less would stay with local operators, which would increase the cost of a meal at restaurants throughout the state.

A third bill, sponsored by Rep. Terry Spahr (D–Hanover), likely subjects some motor vehicles to the Meals and Rooms Tax, broadening what was originally designed as a levy on restaurant meals, hotel stays, and short-term vehicle rentals. The proposal, entitled "subjecting certain motor vehicles to meals and rooms taxes", could extend the tax to vehicle sales beyond the normal scope of just vehicle rentals. This is the only bill that Spahr has sponsored this session.

Taken together, the proposals mark a clear Democratic push to expand the state’s tax base, a shift from the low-tax approach favored by Republican leaders. Critics warn the measures would undercut small businesses and harm New Hampshire’s tourism economy — both cornerstones of the state’s revenue and identity.

“Expanding the Meals and Rooms Tax to cover cars is a slippery slope,” said House Majority Leader Jason Osborne (R-Auburn). “Next thing you know, we’ll be taxing everyday necessities. This is exactly what voters fear when they hear about Democrats in Concord trying to find ‘new revenue.’”

Democrats argue the changes would help stabilize state revenues and fund key programs, but opponents say it’s simply a tax hike under another name.

The Meals and Rooms Tax currently generates over $400 million annually, much of which is distributed back to municipalities. After being lowered from 9% to 8.5% in 2021, the rate has remained steady — something Republicans view as essential to maintaining New Hampshire’s competitive advantage over neighboring states.