Continuing to make New Hampshire an attractive state for trusts, the legislature last year exempted irrevocable “non-grantor trusts” from the New Hampshire I&D Tax. Such irrevocable trusts can accumulate income and not pay income taxes at the state level. However, such trusts pay federal income taxes on the trust’s ordinary income at much higher, compressed rates than individuals. It may be more tax advantageous to distribute the trust’s income and pay taxes at the beneficiary’s lower income tax rates. Each case should be evaluated to determine if there will be tax savings by retaining the income or if it would be better to create such a trust to save on state income taxes.