About Vermont State Income Tax

Vermont uses a progressive tax system with four tax brackets. While Vermont has higher tax rates than many states, the revenue supports quality public services, excellent schools, and strong social programs that contribute to one of the highest quality of life rankings in the nation.

Vermont Tax Brackets 2026

• $0 - $11,600: 3.35%
• $11,601 - $47,150: 6.35%
• $47,151 - $100,525: 7.7%
• Over $100,525: 8.75%

How Vermont Tax is Calculated

Vermont's progressive tax system works as follows:

1. Income is divided into four tax brackets
2. Each bracket is taxed at its corresponding rate
3. Higher earners pay the top rate of 8.75%
4. Standard deduction reduces taxable income

Vermont Tax Features

• Higher Rates Fund Quality Services: Vermont's tax rates support exceptional schools, healthcare, and infrastructure
• Strong Education System: Consistently ranked among the best in the nation
• Low Crime Rates: Safest states in America, supported by community investment
• Quality Healthcare: Comprehensive health programs for residents
• Natural Beauty and Recreation: Protected natural resources and outdoor opportunities

Frequently Asked Questions

What is Vermont's income tax rate?

Vermont has progressive tax rates from 3.35% to 8.75%. The top rate of 8.75% applies to income over $100,525. While these rates are among the highest in the nation, they support Vermont's excellent public services and education system.

Does Vermont tax retirement income?

Vermont taxes retirement income, including pension and IRA distributions. However, Vermont residents age 65 and older may qualify for a tax credit on pension income and Social Security benefits.

Does Vermont tax Social Security?

Vermont does not tax Social Security retirement benefits for residents age 62 and older, making it relatively retirement-friendly for seniors despite higher rates on other income.

Why are Vermont's tax rates so high?

Vermont's higher tax rates reflect a commitment to public investment. The state consistently ranks at the top for education quality, has excellent healthcare outcomes, maintains strong infrastructure, and provides robust social services. These investments contribute to Vermont's high quality of life and strong sense of community.

Vermont vs. Neighboring States

Tax comparison with surrounding states:

• New Hampshire: No state income tax on wages
• Massachusetts: Progressive up to 5.05%
• New York: Progressive up to 6.85%
• Connecticut: Progressive up to 6.99%

What Vermonters Get for Their Taxes

• Top-ranked public education system nationally
• Universal healthcare access programs
• Well-maintained roads and infrastructure
• Strong environmental protection and land conservation
• Robust social safety net and support services
• Safe communities with low crime rates