The neighboring New England states of New Hampshire and Vermont illustrate differences in state capacity to increase tax revenue to support higher education. In 2019, Vermont and New Hampshire provided the lowest and second-lowest amount of state support per FTE in the country ($3,640 and $4,518, respectively). While the states have similar levels of state higher education support, they have very different effective tax rates. As seen in Figure 1, New Hampshire had the fifth lowest effective tax rate (6.4%), and Vermont had the fourth highest effective tax rate (10.4%) in 2019. Vermont collected over $1,500 more per capita in actual tax revenue than New Hampshire even though Vermont’s total taxable resources per capita were more than $15,900 lower than New Hampshire’s. Because Vermont already has one of the highest effective tax rates and has below-average taxable resources per capita, the state may not have the capacity to increase tax revenue that can be allocated to higher education (but could potentially reprioritize existing state tax dollars); whereas New Hampshire, with higher total taxable resources and a lower effective tax rate, may have a greater capacity to increase higher education support through tax rate increases.