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Income Tax in Vermont: Complete Guide 2026

Tax information is for educational purposes only and does not constitute tax advice. Consult a licensed tax professional for your specific situation.

Vermont imposes a graduated individual income tax with four brackets and a top marginal rate of approximately ~8.75% on taxable income above ~$229,500 for single filers. This places Vermont among the higher-tax states in the nation, though the top rate applies only to upper-income earners. Vermont uses federal taxable income as the starting point and offers a robust earned income credit, a child tax credit, and property tax adjustments that help moderate the burden for lower- and middle-income residents. There are no local income taxes in Vermont.

Vermont Income Tax Rates (2026)

Single Filers

Taxable Income Bracket	Marginal Rate
$0 to ~$45,400	~3.35%
~$45,401 to ~$110,050	~6.60%
~$110,051 to ~$229,500	~7.60%
Over ~$229,500	~8.75%

Married Filing Jointly

Taxable Income Bracket	Marginal Rate
$0 to ~$75,850	~3.35%
~$75,851 to ~$183,400	~6.60%
~$183,401 to ~$279,450	~7.60%
Over ~$279,450	~8.75%

How Vermont Income Tax Works

Federal Conformity

Vermont starts with federal taxable income and applies a separate rate structure. Because Vermont uses post-deduction federal taxable income, filers benefit from the federal standard deduction (~$14,600 single; ~$29,200 joint) or itemized deductions without needing to recalculate at the state level.

Vermont-Specific Adjustments

Addition: Interest on out-of-state municipal bonds
Subtraction: Interest on U.S. government obligations
Subtraction: Certain adjustments for capital gains on Vermont property
Subtraction: Military pay for active-duty service outside Vermont

Key Exclusions

Social Security: Vermont exempts Social Security benefits for single filers with AGI below ~$50,000 and joint filers below ~$65,000. A partial exemption applies at higher income levels.
Pension income: Generally taxable; no broad pension exclusion
Military retirement: Subject to the standard Vermont income tax (no specific exclusion beyond the general Social Security provisions)

Tax Credits

Earned income credit: ~38% of the federal EITC (refundable) — one of the highest state EITC rates in the nation
Child tax credit: ~$1,000 per qualifying child under age 6 for filers with AGI below certain thresholds (refundable)
Child and dependent care credit: ~50% of the federal credit for lower-income filers, phasing down for higher incomes
Property tax credit (renter rebate): For renters and homeowners whose property taxes or allocated rent exceeds a percentage of household income
Historic preservation credit: ~10% of qualified rehabilitation expenditures

Who Must File in Vermont

Filing is required if:

You are a Vermont resident required to file a federal return
You are a part-year resident or nonresident with Vermont-source income
You want to claim the earned income credit, child tax credit, or property tax credit

Vermont uses Form IN-111 for all individual filers. The filing deadline is April 15.

Comparison to National Average

State	Top Income Tax Rate	Structure
Vermont	~8.75%	Graduated (4 brackets)
New Hampshire	~0% (interest/dividends phasing out)	Limited
Massachusetts	~9.0% (with surcharge)	Flat + surcharge
Maine	~7.15%	Graduated
New York	~10.9%	Graduated
National average	~4.60%	Varies

Vermont’s top rate is among the highest in the country. However, the generous EITC, child tax credit, and property tax credit programs substantially reduce the effective burden for lower- and middle-income households.

Tips for Minimizing Vermont Income Tax

Claim the earned income credit. Vermont’s EITC at ~38% of the federal credit is among the most generous in the nation and is fully refundable.
Use the child tax credit. The ~$1,000 per child under age 6 credit is refundable and provides meaningful relief for qualifying families.
Apply for the property tax credit or renter rebate. Homeowners and renters whose housing costs exceed a percentage of household income can receive direct relief.
Verify Social Security exemption eligibility. If your AGI is below ~$50,000 (single) or ~$65,000 (joint), your Social Security benefits should be fully exempt.
Maximize retirement contributions. 401(k) and IRA contributions reduce federal taxable income, which is Vermont’s starting point.
Time income to manage bracket exposure. The jump from ~6.60% to ~7.60% at ~$110,050 (single) and the further increase to ~8.75% at ~$229,500 make income timing strategies particularly valuable.
Contribute to a Vermont 529 plan. Vermont offers a ~10% credit on contributions up to ~$2,500 per beneficiary per year, providing up to ~$250 in direct tax savings.

Key Takeaways

Vermont imposes a four-bracket graduated income tax with a top rate of ~8.75%, among the highest in the nation
The state EITC at ~38% of the federal credit is one of the most generous in the country
A refundable child tax credit of ~$1,000 per child under 6 benefits qualifying families
Social Security is exempt for filers with AGI below ~$50,000 (single) or ~$65,000 (joint)
Vermont uses federal taxable income as the starting point, simplifying the filing process
No local income taxes are imposed in Vermont

Next Steps

Federal Income Tax Guide 2026 — See how federal taxable income flows to your Vermont return.
State Income Tax Rates Comparison 2026 — Compare Vermont to all 50 states.
Earned Income Tax Credit Guide 2026 — Maximize your federal and Vermont EITC.
Child Tax Credit Guide 2026 — Understand federal and Vermont child tax credits.
Find a CPA Near You — Get professional Vermont tax guidance.