Vermont uses a progressive state income tax system with rates ranging from 3.35% to 8.75%. Vermont has one of the highest top marginal rates in the country, though it only applies to income over $229,550 for single filers.
Vermont Tax Brackets
| Taxable Income (Single) | Tax Rate |
|---|---|
| $0 - $45,400 | 3.35% |
| $45,401 - $110,050 | 6.6% |
| $110,051 - $229,550 | 7.6% |
| Over $229,550 | 8.75% |
| Taxable Income (Married Filing Jointly) | Tax Rate |
|---|---|
| $0 - $75,850 | 3.35% |
| $75,851 - $183,400 | 6.6% |
| $183,401 - $279,450 | 7.6% |
| Over $279,450 | 8.75% |
Vermont's brackets are indexed for inflation annually. Based on Vermont Department of Taxes guidelines.
What You'll See on Your Paystub
A Vermont worker's paystub includes both federal income tax withholding and state deductions:
| Deduction | Rate | Notes |
|---|---|---|
| Federal Income Tax | Varies | Based on W-4 and income |
| Social Security | 6.2% | Up to $181,200 wage base |
| Medicare | 1.45% | No wage limit |
| Vermont State Income Tax | 3.35% - 8.75% | Progressive based on income |
Vermont Standard Deduction
Vermont's standard deduction matches federal amounts:
| Filing Status | Standard Deduction (2026) |
|---|---|
| Single | $15,000 |
| Married Filing Jointly | $30,000 |
| Head of Household | $22,500 |
Vermont conforms to the federal standard deduction, making tax preparation simpler for most residents.
No Local Income Taxes
Vermont does not allow cities or towns to impose local income taxes. Your state withholding covers all Vermont income tax obligations.
Burlington Metro Workers
Burlington is Vermont's largest city:
- University of Vermont and UVM Medical Center (major employers)
- Tech startups and established companies
- Tourism and hospitality
- No city income tax
Upper Valley Workers
The Upper Valley straddles the Vermont-New Hampshire border:
- Dartmouth-Hitchcock Medical Center (major employer)
- Dartmouth College (in NH, but many VT residents work there)
- Many workers cross the Connecticut River for work
- Significant tax difference between VT and NH
Vermont-New Hampshire Border
New Hampshire has no income tax, creating important considerations:
- Live in VT, work in NH: Pay Vermont tax on all income (VT taxes residents worldwide)
- Live in NH, work in VT: Pay Vermont tax only on Vermont-source income
Vermont residents working in New Hampshire still owe Vermont income tax. Living in NH and working in VT provides the best tax outcome for border workers.
Ski Industry Workers
Vermont's ski industry is a significant employer:
- Stowe, Killington, Sugarbush, Mount Snow, and others
- Seasonal employment patterns
- Tips and gratuities are taxable
- Housing may be provided (taxable benefit)
Seasonal workers should:
- Track tip income carefully
- Consider quarterly estimated payments
- Understand off-season unemployment benefits
Agriculture and Food Production
Vermont has a strong agricultural sector:
- Dairy farming (Vermont is known for cheese and dairy)
- Maple syrup production
- Craft brewing and distilling
- Farm-to-table restaurants
Farm workers and agricultural businesses have special considerations:
- Seasonal income patterns
- Self-employment is common
- Business expense deductions
Remote Workers
Vermont has attracted remote workers:
- Quality of life and outdoor recreation
- Reliable broadband in many areas
- Work-from-home became more common post-2020
- Vermont taxes residents on all income regardless of where employer is located
If you move to Vermont to work remotely, you'll owe Vermont income tax on your earnings, even if your employer is in a no-income-tax state.
Retirement Income
Vermont taxes most retirement income:
- Social Security benefits are exempt up to certain income thresholds
- Pension income is generally taxable
- 401(k) and IRA distributions are taxable
- Vermont has no special retirement income exclusion
Vermont is not particularly tax-friendly for retirees. Neighboring New Hampshire has no income tax on any retirement income.
Vermont vs. Neighboring States
| State | Tax Structure | Top Rate |
|---|---|---|
| Vermont | Progressive | 8.75% |
| New Hampshire | None | 0% |
| Massachusetts | Flat + Surtax | 9% |
| New York | Progressive | 10.9% |
Comparing Take-Home Pay
Here's how a $75,000 annual salary compares in the region:
| State | Effective Rate | Annual State Tax |
|---|---|---|
| Vermont | ~4.8% | ~$3,600 |
| New Hampshire | 0% | $0 |
| Massachusetts | ~5% | ~$3,750 |
| New York | ~5.5% | ~$4,125 |
Vermont's lowest bracket of 3.35% helps keep effective rates moderate for most workers. The high top rate primarily affects high earners.
Earned Income Tax Credit
Vermont offers a state Earned Income Tax Credit:
- 38% of the federal EITC amount
- Refundable credit for low-to-moderate income workers
- Claimed on Vermont income tax return
- Can significantly reduce tax burden for qualifying workers
Child and Dependent Care Credit
Vermont provides a credit for child care expenses:
- 72% of the federal Child and Dependent Care Credit
- Helps offset costs of childcare for working parents
- Non-refundable credit
Key Takeaways
- Vermont's top rate of 8.75% is among the highest in the nation
- Most workers fall in the 3.35% or 6.6% brackets
- No local income taxes anywhere in the state
- Conforms to federal standard deduction
- Vermont residents owe tax on all income, even if working in NH
- Strong state EITC (38% of federal) helps lower-income workers