Vermont tax guide
Vermont features a progressive income tax structure designed to scale with earnings across four brackets. While the state is ranked as the eighth highest-tax state, it provides public services funded by these revenues, including significant support for local education and infrastructure.
Key tax highlights
Payroll
- Vermont income tax rates range from 3.35% to 8.75% depending on your taxable income bracket.
- Employers are required to withhold state income tax from employee paychecks based on Vermont-specific withholding tables.
- Vermont tax brackets are adjusted annually for inflation to prevent bracket creep.
Local taxes
- Vermont does not impose a separate local income tax, meaning your municipal taxes are primarily derived from local property assessments rather than payroll deductions.
Deductions
- Vermont allows for a standard deduction that is tied to federal tax law, providing a baseline reduction in taxable income.
- Taxpayers may claim a personal exemption and dependency exemptions to lower their state tax liability further.
Salary examples
Pre-computed take-home estimates at common salary levels. For example, a $75,000 salary in Vermont yields about $58,248 after all deductions (77.7% take-home rate). Use the calculator above with your actual salary to see your specific estimate.
| Salary | Federal | State | FICA | Take-Home | Rate |
|---|---|---|---|---|---|
| $50,000 | $3,820 | $1,694 | $3,825 | $40,661 | 81.3% |
| $75,000 | $7,670 | $3,344 | $5,738 | $58,248 | 77.7% |
| $100,000 | $13,170 | $4,995 | $7,650 | $74,185 | 74.2% |
| $150,000 | $24,734 | $8,597 | $11,475 | $105,194 | 70.1% |
Neighboring states
How Vermont compares with border states on income tax. At a $75,000 salary, a Vermont worker pays $3,344 in state tax annually.
| State | Tax type | Top rate |
|---|---|---|
| New Hampshire | no tax | No state income tax |
| Massachusetts | progressive | 5.00% |
| New York | high tax | 10.90% |
Tax tips for Vermont
- Review your W-4 form annually to ensure your Vermont state withholding accurately reflects your current tax bracket.
- Check your eligibility for the Vermont Earned Income Tax Credit, which is calculated as a percentage of your federal EITC.
- Consider tax-advantaged retirement accounts to reduce your federal adjusted gross income, which serves as the starting point for your Vermont state tax calculation.
- Keep records of your property tax payments, as Vermont offers a renter rebate or property tax credit for eligible low-to-moderate-income residents.
Did you know?
- •Vermont is one of the few states that allows income tax credits specifically for investments in certain small business initiatives.
- •The state tax calculation in Vermont is heavily tethered to federal taxable income, meaning changes in federal tax law often have a direct impact on your Vermont state return.
Filing guidance
Vermont taxpayers must file Form IN-111 to report their state income tax. Since the state relies on federal adjusted gross income as the base, it is critical that your federal return is completed accurately before calculating your state liability. Be sure to verify if you qualify for any specific Vermont-only credits, such as the Education Property Tax Credit, which can significantly offset the tax burden for qualifying homeowners and renters regardless of your primary income tax bracket.
Relocation context
Comparing Vermont with nearby states can reveal whether paycheck differences are driven by state tax, local tax, or payroll deductions.