Your question about the differences in income tax in Vermont versus
New Hampshire is an interesting one. I imagine that you might have
two different job offers, in either state, or perhaps someone from the
Free State Project bet you that you'd be able to keep more of that
$28,000 in New Hampshire than $29,000 earned in Vermont. Or perhaps
you're thinking of where you'd prefer to have employees...
New Hampshire doesn't have state income taxes, but they do collect
taxes in other ways. I wondered whether Vermont takes in more taxes
per capita than New Hampshire, or whether New Hampshire makes up those
taxes in other ways.
The US Census Breau has a nice breakdown by state:
Per capita taxation in Vermont was $2844.86, while in New Hampshire it
was $1542.61. That certainly suggests that one might need to make
$1000 more in Vermont, to have the same disposable income.
Now, on to some specific calculations for each scenario.
*** New Hampshire ***
The US income tax on $28000 would be $2643. You'd keep $25,357 after
income taxes in New Hampshire. Tax on investment income is 5%. Tax
on restaurant meals, alcohol, and lodging is 8%. There is no other
*** Vermont ***
The US income tax on $29000 would be $2793. The Vermont income tax on
amounts less than $29050 is 3.6%, plus ?Use Tax? (uncollected sales
tax) of a few dollars. The total in this case is $758+6 = $766. Tax
on restaurant meals is 9%, whereas tax on lodging and alcohol is 10%.
Sales tax is 6%, but excludes groceries, clothing, and some other
Vermont also has a renter's credit, the amount of which depends on
your income and rent. In this scenario, the credit would amount to
21% of rent less $1450 (or 21% of rent over $575.40 per month) in this
scenario, but not more than $766. This is ONLY for 12 month
(January-December) residents of Vermont.
The net wages would be $25,441 in Vermont, including neither Renter's
Credit, nor costs of sales taxes.
*** Summary ***
Net income in New Hampshire would be $25,357, $84 LESS than the net
income in Vermont of $25,441. Additional sales and gas taxes would
likely be incurred in Vermont. Finally, Vermont spends $1302 more per
person than New Hampshire.
I hope that answers your question. Here are some state-specific
resources that I used:
Summary of Vermont taxes
Individual Income Tax Forms for Vermont
Overview of New Hampshire Taxes
The Free State Project
Summary of state sales taxes
2005 Federal Tax Rates:
IRS Form 1040 Information Center: