The neighboring New England states of New Hampshire and Vermont illustrate differences in state capacity to increase tax revenue to support higher education. In 2018, New Hampshire and Vermont provided the lowest and second-lowest amount of education appropriations per FTE in the country ($3,134 and $3,213), 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 has the twelfth lowest effective tax rate (6.7%), and Vermont has the third highest effective tax rate (10.0%). Vermont collected nearly $1,100 more per capita in actual tax revenue than New Hampshire even though Vermont’s total taxable resources per capita were nearly $15,300 lower than New Hampshire’s. Because Vermont already has one of the highest effective tax rates, the state may not have the capacity to increase tax revenue that can be allocated to higher education; whereas New Hampshire, with higher total taxable resources and a lower effective tax rate, may have a greater capacity to increase higher education support.