Taxes in Maine vs. New Hampshire: Which State is Cheaper?

Choosing the right state to reside in might have a big impact on your financial planning when it comes to taxes. Each of the Northeastern United States’ bordering states, Maine and New Hampshire, has its unique set of tax regulations. Which of these two states has cheaper taxes, Maine or New Hampshire, is a question that locals frequently ask. Taxes in Maine vs. New Hampshire

Tax rates and laws differ between Maine and New Hampshire. Maine has a progressive income tax system, which means that people with greater incomes must pay a larger share of it in taxes. The tax rate is in the 5.8% to 7.15% range. In addition, Maine’s property taxes are higher than the national average and its sales tax is 5.5%.

New Hampshire, on the other hand, has negligible property taxes and no state income tax. Because of this, New Hampshire is a desirable state for people who wish to pay as little tax as possible. However, New Hampshire has some of the highest business taxes in the nation, which deters entrepreneurs from relocating there.

A federal program called the Paycheck Protection Program (PPP) was created to offer financial support to small businesses affected by the COVID-19 outbreak. Upon fulfillment of specific requirements, the PPP debts are forgiven. PPP loans are not subject to state taxation in Vermont. Therefore, the forgiven portion of the loan will not be subject to state taxes for enterprises that got PPP loans in Vermont.

One of the few states that taxes Social Security benefits is Vermont. The state does, however, provide some assistance for retirees. For taxpayers 62 and older, Vermont offers a $5,000 deduction on retirement income. In addition, the state provides seniors who fulfill specific income requirements with a property tax benefit. Is a S corporation recognized in Vermont?

S corporations are accepted in Vermont, yes. For the purposes of federal taxation, S companies are businesses that choose to pass through to their shareholders corporate income, losses, deductions, and credits. S companies are accepted in Vermont for state tax purposes as well. Although S firms must pay the state’s corporate income tax, the money is passed on to the shareholders for individual taxation.

California will have the highest taxes in 2021. The top marginal tax rate in California’s progressive income tax system is 13.3%. In addition, the state levies substantial property taxes and a 7.25 percent sales tax. The next two states with the greatest tax loads are New York and Hawaii.

In conclusion, your specific position and priorities will determine whether you choose Maine or New Hampshire. Due to its progressive income tax structure, Maine might not be the greatest choice if you make a large salary. The high business tax rate in New Hampshire might not be ideal for you, though, if you operate a firm. It’s crucial to take into account every facet of each state’s tax system before choosing.