Yes, Vermont has a state income tax. It applies to residents, nonresidents with Vermont-source income, estates, and trusts, with four marginal rates running from 3.35 percent to 8.75 percent. The state starts from your federal adjusted gross income, then applies its own deductions, exemptions, and credits to figure what you owe. If your Vermont tax liability after withholding and credits comes to more than $100, you have to file a return by April 15.1Vermont Department of Taxes. Resident
What You’ll Pay: Vermont’s Four Tax Brackets
Vermont’s rates are 3.35 percent, 6.60 percent, 7.60 percent, and 8.75 percent, set in statute, with the income thresholds for each bracket adjusted upward each year for inflation.2Vermont General Assembly. Vermont Statutes Title 32, Chapter 151, Section 5822 The current year’s exact dollar figures appear in the Vermont Department of Taxes tax tables.3Vermont Department of Taxes. 2026 VT Tax Tables
The base statutory brackets for single filers are:
- 3.35% on the first $38,700 of taxable income
- 6.60% on income from $38,700 to $93,700
- 7.60% on income from $93,700 to $195,450
- 8.75% on income over $195,450
For married couples filing jointly, the same rates apply to wider ranges:
- 3.35% on the first $64,600
- 6.60% on income from $64,600 to $156,150
- 7.60% on income from $156,150 to $237,950
- 8.75% on income over $237,950
The rates are marginal, so each percentage applies only to the dollars that fall inside that bracket, not to your whole income. A single filer earning $100,000 pays 3.35 percent on the first slice, 6.60 percent on the next, and so on up to wherever that income lands.
How Vermont Calculates Your Taxable Income
Vermont taxable income starts with your federal adjusted gross income. From there, the state requires certain additions (interest from out-of-state municipal bonds, for instance) and allows certain subtractions (interest from U.S. government bonds, which states cannot tax), then lets you take the Vermont standard deduction.
For tax year 2025, the Vermont standard deduction is $7,650 for single and married-filing-separately filers, $15,300 for married couples filing jointly or qualifying surviving spouses, and $11,450 for head of household. An additional $1,250 is available if you are 65 or older or blind.4Vermont Department of Taxes. Filing Season FAQs
Social Security Benefits
Vermont fully exempts Social Security benefits for single, head-of-household, and married-filing-separately filers with AGI of $55,000 or less, and for joint filers with AGI of $70,000 or less. Above those thresholds, a partial exemption phases out as income climbs.5Vermont Department of Taxes. Social Security Exemption
Retirement Income
Pensions, 401(k) distributions, and IRA withdrawals are generally taxable in Vermont. Narrow exclusions exist for certain government retirement pay: military retirees can exclude the first $10,000 of retirement income, and the same $10,000 exclusion applies to federal Civil Service Retirement System benefits when AGI is below $60,000 (or $75,000 for joint filers). A comparable exclusion covers income from certain other government retirement systems tied to earnings that were not subject to Social Security tax. You can only claim one of these exemptions per return, including the Social Security exemption.6Vermont Department of Taxes. Seniors and Retirees
Credits That Reduce What You Owe
Vermont offers several credits that come off your tax bill directly, and the biggest ones are refundable, meaning they can produce a refund even when your liability is zero.
Earned Income Tax Credit
Vermont’s EITC equals 38 percent of your federal EITC if you have qualifying children, and 100 percent of the federal credit for workers without children. It is fully refundable, and you have to qualify for the federal credit first.7Vermont General Assembly. Vermont Code Title 32, Chapter 151, Section 5828b – Earned Income Tax Credit
Child Tax Credit
Vermont pays a refundable $1,000 credit for each qualifying child age six or younger at the end of the tax year. The credit starts phasing out when AGI goes over $125,000 (same threshold for every filing status), dropping by $20 for every $1,000 of income above that line.8Vermont General Assembly. Vermont Statutes Title 32, Chapter 151, Section 5830f
Child and Dependent Care Credit
Vermont’s version equals 50 percent of the federal child and dependent care credit for care that lets you work or look for work. You have to qualify federally to claim it.9Vermont Department of Taxes. Tax Credits and Adjustments for Individuals
Credit for Taxes Paid to Another State
If you earn income in another state and pay income tax there, Vermont credits the amount so the same income is not taxed twice. The credit is capped at the share of your Vermont tax attributable to that out-of-state income.
Who Has to File, and When
You must file a Vermont return if you are a Vermont resident and your expected state tax after withholding and credits comes to more than $100.1Vermont Department of Taxes. Resident You count as a resident if you are domiciled in Vermont, or if you keep a permanent home in Vermont and spend more than 183 days there in the year. Nonresidents who earn more than $100 of income from Vermont sources also have to file.
Returns are due April 15.10Vermont Department of Taxes. Personal Income Tax Vermont grants a six-month extension if you request one through the myVTax portal or mail Form IN-151 by the April deadline; a federal extension automatically extends your Vermont deadline too.11Vermont Department of Taxes. File an Extension An extension buys time to file, not to pay. Estimate what you owe and send it in by April 15 or interest and penalties start running.
If your withholding will cover less than 90 percent of your Vermont tax for the year, you should pay quarterly estimated tax. This commonly applies to self-employed workers, freelancers, retirees without withholding, and people with significant investment income. Estimated payments are due April 15, June 15, September 15, and January 15 of the following year.12Vermont Department of Taxes. Estimated Income Tax
Penalties for Missing the Deadline
Vermont charges 5 percent of the unpaid tax for each month (or partial month) a return is late, plus interest on the balance from the original due date until it is paid.13Vermont General Assembly. Vermont Code Title 32, Chapter 103, Section 3202 – Interest and Penalties The late-filing penalty can be waived for reasonable cause, but interest accrues no matter the reason. Filing on time, even without full payment, avoids the penalty and limits the damage to interest on the unpaid balance.