Vermont Tax and CPA Services: State, County and City Taxes

Vermont is a small state with a full set of taxes: four graduated income tax brackets, a Social Security exemption that phases out by income, a 1% local option on top of sales and meals taxes, and a child care payroll contribution that employers have paid since mid-2024. This guide is written for tax year 2025 returns and 2026 planning.

Income tax: four brackets and a 3% floor

The Department of Taxes 2025 rate schedules apply rates to Vermont taxable income. Heads of household and married filers separately use their own thresholds.

There is a catch for higher earners: when federal AGI exceeds $150,000, the Vermont tax is the greater of the schedule result or 3% of AGI less interest from U.S. obligations. Residents who pay income tax to another state or Canadian province may claim a credit using Schedule IN-117. The Department's credits page also describes a refundable $1,000 credit per child age six or younger, phasing out completely at $175,000 of AGI (its example is tax year 2026).

Social Security and other retirement income

Vermont lets income-eligible taxpayers subtract all or part of federally taxable Social Security benefits. For tax year 2025, single, separate, widowed and head-of-household filers get the full exemption up to $55,000 of AGI, a phase-out from $55,000 to $65,000, and none at $65,000 or more. Joint filers have higher thresholds and get none at $80,000 or more; see the AGI table on the Department's exemption page. The exemption does not cover pensions, IRA withdrawals or other income, so see our Social Security taxation guide.

Sales, meals and rooms, and the local option

The sales tax is 6%, and use tax applies at the same rate. Out-of-state sellers must register at $100,000 of sales or 200 transactions in any preceding twelve months. Meals and rooms are taxed at 9% and alcohol at 10%. A municipality can vote to add a 1% local option tax on sales, meals, rooms and alcohol, which raises sales tax to 7% and meals and rooms to 10% in participating towns. The Department collects it, though Burlington and Rutland City collect their own local taxes. Monthly filers pay by the 25th of the following month.

Business entities, nonresident owners and annual reports

S corporations, partnerships and LLCs taxed as either must file a business entity return and generally pay a $250 minimum tax. Composite filing for nonresident owners is mandatory above 50 nonresident owners, and quarterly estimates are made on Form WH-435. The Department's entity page describes composite filing and nonresident withholding rather than a separate SALT-cap election, so confirm availability before planning around one. LLCs file annual reports with the Secretary of State about three months after fiscal year end, and corporations about two and a half months.

Payroll: child care contribution and unemployment

Employers pay a 0.44% child care contribution on wages earned in Vermont, created by Act 76 of 2023 and collected since July 1, 2024. They may withhold up to a quarter of it (0.11%) from employee wages, and self-employed people owe 0.11% on net Vermont self-employment income. It is reported with withholding on the WHT-436. See our payroll services.

The Department of Labor lists a taxable wage base of $15,400 for 2026 and a new employer rate of 1% beginning July 1, 2026, with experience-rated employers in a range from 0.4% to 8.4%. Quarterly reports are due April 30, July 31, October 31 and January 31. See our unemployment insurance guide. Act 32 of 2025 expanded unpaid family and parental leave to employers with at least 15 employees for family leave and at least 10 for other covered leaves.

Property: homestead declaration and transfer tax

Vermont property tax bills show education and municipal amounts, and the Homestead Declaration (HS-122) is filed through myVTax along with any property tax credit claim, which you generally have until October 15 to file. The property transfer tax is paid by the buyer: for a principal residence, 0.5% applies to the first $200,000 of value, and the Department lists a combined general and clean water rate of 1.47% above that. Other property is charged higher rates.

Commuting to New Hampshire and remote work

Vermont taxes residents on income from anywhere, with a credit for tax paid to other states. A New Hampshire paycheck has no New Hampshire wage tax to credit, so Vermont residents commuting there pay Vermont tax in full. Our New Hampshire and Massachusetts pages cover neighboring rules.

How we can help

We prepare Vermont returns and part-year or nonresident returns, check Social Security exemption and credit eligibility, review business entity and composite filings, set up child care contribution withholding and unemployment accounts, and respond to state tax notices. See our multi-state tax service.

Frequently asked questions

General information only, not tax, legal or accounting advice for your situation. Rules, limits and deadlines change; confirm the current rules with the official source or a qualified professional before you act. Reading this page does not create a professional relationship with CPA Tax Payroll and Accounting Corp.