Vermont, known for its picturesque landscapes and vibrant communities, also has a diverse array of taxes that residents and businesses must navigate. Understanding these taxes is crucial for effective financial planning, whether you’re a long-time resident, a new business owner, or considering a move to the Green Mountain State. Vermont’s tax system includes income taxes, property taxes, sales taxes, and corporate taxes, among others.
Vermont Income Tax
Vermont income tax is a progressive tax, meaning the rate increases as your income increases. This tax applies to both residents and non-residents who earn income in Vermont. The Vermont Department of Taxes administers this tax, and it is an essential part of the state’s revenue system.
Vermont Income Tax Brackets 2024
Vermont’s income tax rates are divided into five brackets. The tax rates for 2024 are as follows:
| Filing Status | Taxable Income Range | Tax Rate |
|---|---|---|
| Single | ||
| Up to $42,150 | $0 – $42,150 | 3.35% |
| $42,151 to $102,700 | $42,151 – $102,700 | 6.60% |
| $102,701 to $214,500 | $102,701 – $214,500 | 7.60% |
| Over $214,500 | Over $214,500 | 8.75% |
| Married Filing Jointly | ||
| Up to $70,250 | $0 – $70,250 | 3.35% |
| $70,251 to $171,150 | $70,251 – $171,150 | 6.60% |
| $171,151 to $261,500 | $171,151 – $261,500 | 7.60% |
| Over $261,500 | Over $261,500 | 8.75% |
| Married Filing Separately | ||
| Up to $35,125 | $0 – $35,125 | 3.35% |
| $35,126 to $85,575 | $35,126 – $85,575 | 6.60% |
| $85,576 to $130,750 | $85,576 – $130,750 | 7.60% |
| Over $130,750 | Over $130,750 | 8.75% |
| Head of Household | ||
| Up to $56,850 | $0 – $56,850 | 3.35% |
| $56,851 to $144,450 | $56,851 – $144,450 | 6.60% |
| $144,451 to $236,300 | $144,451 – $236,300 | 7.60% |
| Over $236,300 | Over $236,300 | 8.75% |
If you are a Vermont resident, part-year resident, or non-resident with income sourced from Vermont, you must file a Vermont Income Tax Return (Form IN-111). The filing deadline is typically April 15th, but it may be extended to the next business day if the 15th falls on a weekend or holiday.
Vermont offers various tax credits and deductions to reduce your tax liability. These include credits for child and dependent care, higher education, and contributions to certain retirement accounts. Vermont also allows for itemized deductions similar to those on your federal tax return, though with some state-specific limitations.
Vermont Property Tax
Property taxes in Vermont are a significant source of revenue for local governments, funding schools and municipal services. Property taxes are assessed on real estate, including land and buildings, and are based on the property’s fair market value.
Homestead and Non-Homestead Property
Vermont distinguishes between homestead and non-homestead property. Homestead property refers to the primary residence of Vermont residents, while non-homestead property includes second homes, rental properties, and commercial real estate. The tax rates differ between these categories.
Vermont Education Property Tax
A large portion of Vermont property taxes goes toward funding public education. The education tax rate is determined annually by the state and varies based on the town’s school budget needs.
Property Tax Relief
Vermont offers property tax relief to eligible homeowners through the Property Tax Credit and the Property Tax Adjustment Program. These programs are designed to help lower-income residents reduce their property tax burden. The amount of relief depends on household income and the amount of property tax paid.
Vermont Sales and Use Tax
Vermont imposes a sales tax on the sale of tangible personal property and certain services. The general sales tax rate in Vermont is 6%. Additionally, some localities may impose an additional 1% local option tax.
Vermont Use Tax
The use tax applies to goods purchased outside of Vermont for use within the state when the seller did not collect Vermont sales tax. If you buy something online or in another state and the retailer does not charge Vermont sales tax, you are responsible for reporting and paying the equivalent use tax.
Exemptions from Vermont Sales and Use Tax
Vermont provides several exemptions to the sales and use tax, including for essential items such as groceries, prescription drugs, and certain medical devices. Additionally, clothing and footwear costing less than $110 per item are exempt from sales tax.
Vermont Corporate Income Tax
Businesses operating in Vermont are subject to the Vermont Corporate Income Tax. This tax is imposed on the net income of C-corporations, S-corporations, and certain limited liability companies (LLCs) that have elected to be taxed as corporations.
Corporations must file a Vermont Corporate Income Tax Return (Form CO-411). The return is due on the 15th day of the third month following the close of the corporation’s fiscal year. Vermont also requires estimated tax payments if the corporation expects to owe more than $500 in taxes for the year.
Vermont offers various tax credits and incentives for businesses, including the Vermont Employment Growth Incentive (VEGI), which rewards businesses for creating jobs and stimulating economic growth in the state. Other credits are available for research and development, renewable energy investments, and rehabilitating historic buildings.
Vermont Estate Tax
Vermont imposes an estate tax on the transfer of the estate of a deceased person. The tax applies to estates with a value above the Vermont estate tax exemption threshold.
Exemption and Rates
As of 2024, the Vermont estate tax exemption is $5 million. Estates valued above this amount are subject to tax at rates ranging from 16% to 18%.
If a decedent’s estate exceeds the exemption amount, the estate’s executor must file a Vermont Estate Tax Return (Form E-1). The return is due within nine months of the decedent’s date of death.
Other Vermont Taxes
Meals and Rooms Tax
Vermont imposes a meals and rooms tax on prepared food, beverages, and lodging. The rate is 9% on meals and non-alcoholic beverages and 10% on alcoholic beverages and lodging.
Fuel Tax
The Vermont fuel tax applies to the sale of heating fuels, including oil, propane, and wood products. The tax rate varies depending on the type of fuel.
Cigarette and Tobacco Tax
Vermont imposes an excise tax on cigarettes and other tobacco products. As of 2024, the tax is $3.08 per pack of cigarettes.