Vermont Nonresident Income Tax: Brackets, Filing, and Deadlines

Vermont nonresident income tax uses the same four brackets that apply to residents, running from 3.35% to 8.75%, but you only pay on the portion of your income connected to Vermont. That portion is figured through an apportionment calculation on Schedule IN-113, which compares your Vermont-sourced income to your total federal income and scales the tax accordingly. The result is usually an effective rate somewhere between the bottom and top bracket, not a flat application of either.

The Four Vermont Tax Brackets

Vermont’s progressive tax structure sits in 32 V.S.A. § 5822. For married couples filing jointly, the statutory thresholds are:

  • 3.35% on taxable income up to $64,600
  • 6.6% on income from $64,600 to $156,150
  • 7.6% on income from $156,150 to $237,950
  • 8.75% on income above $237,950

Single filers hit the top 8.75% bracket at $195,450, and heads of household reach it at $216,700.1Vermont General Assembly. Vermont Code 32 VSA 5822 – Tax on Income of Individuals, Estates, and Trusts The dollar thresholds are adjusted periodically, so confirm the current figures on the Department of Taxes rate schedule page before you file.2Vermont Department of Taxes. Vermont Rate Schedules and Tax Tables

How the Nonresident Calculation Works

The math takes two steps, and the first one looks alarming until you see the second.

First, you calculate a hypothetical tax on your entire federal taxable income as if you were a full-year Vermont resident. That means applying the bracket table above to everything you earned, everywhere. Second, you multiply that hypothetical tax by a fraction: your Vermont-sourced income divided by your total federal adjusted gross income. The product is your actual Vermont tax.

This preserves the progressive rate structure without taxing income Vermont has no claim to. If you earned $300,000 total and $50,000 of it came from Vermont, you don’t pay 3.35% on the $50,000 as though it were your only income. You pay roughly one-sixth of what a $300,000 earner would owe Vermont. Your effective rate lands above the bottom bracket but below the top one. Schedule IN-113 walks through the allocation line by line.

What Income Vermont Can Tax

The sourcing rules in 32 V.S.A. § 5823 identify which types of income create a Vermont tax obligation for a nonresident:

  • Wages and compensation for services you physically performed while in Vermont. Your employer’s location doesn’t matter; where you were sitting when you did the work does.3Vermont Department of Taxes. Nonresident
  • Rental income and royalties from Vermont property, including timber rights.
  • Gains from selling Vermont real estate or other property located in the state.
  • Earnings from any trade or profession conducted within Vermont, including noncompete payments tied to a Vermont business and goodwill from selling a Vermont business.
  • Your share of income from a partnership, LLC, or S-corporation operating in Vermont. If the entity’s only Vermont connection is limited investment activity with no other business nexus, that income is not taxed.3Vermont Department of Taxes. Nonresident
  • Gambling and lottery winnings from wagers placed in Vermont, plus any Vermont Lottery or multi-state lottery ticket purchased in the state.
  • Income from a nonqualified deferred compensation plan that would have been Vermont-sourced when originally earned.4Vermont General Assembly. Vermont Code 32 VSA 5823 – Vermont Income of Nonresident Individuals, Estates, and Trusts

Remote Work and Physical Presence

Vermont taxes based on where the work is physically performed. If you live in New Hampshire and work remotely from home for a Vermont employer, the income you earn at home is not Vermont income, and Vermont cannot tax it.5Vermont Department of Taxes. Withholding for Employers Only the days you physically cross into Vermont to work at the office or a Vermont job site produce taxable Vermont wages.

The rule cuts both ways. Out-of-state employers are not required to begin withholding Vermont income tax until an employee has worked from a Vermont location for 30 days.5Vermont Department of Taxes. Withholding for Employers If you relocate to Vermont but keep your out-of-state job, every dollar earned while physically in Vermont becomes Vermont-sourced. And if you stay more than 183 days while maintaining a home in the state, you can be reclassified as a statutory resident under 32 V.S.A. § 5811 and taxed on all your income.6Vermont General Assembly. Vermont Code 32 VSA 5811 – Definitions

When You Have to File

Not every dollar of Vermont income triggers a filing requirement. You need to file a Vermont nonresident return if you were required to file a federal return and either of the following is true:

  • You earned or received more than $100 in Vermont income, or
  • You earned or received more than $1,000 in gross income as a nonresident.7Vermont Department of Taxes. Who Should File

The $100 threshold catches people who might assume a small amount isn’t worth reporting. A $150 gain on a piece of Vermont land creates a filing obligation.

Forms and Deadlines

Nonresidents file Form IN-111, the Vermont Income Tax Return, along with Schedule IN-113 for Income Adjustment Calculations. Part I of the schedule identifies your Vermont-sourced income by category; Part II calculates the Vermont percentage that scales your hypothetical full-year tax down to your actual liability.8Vermont Department of Taxes. Tax Year 2025 Personal Income Tax Forms Keep accurate records of which days you worked in Vermont, any Vermont property transactions, and your federal return figures.

Returns are due April 15 following the close of the tax year.9Vermont Department of Taxes. Filing Season FAQs You can file electronically through the myVTax portal or approved tax software.10Vermont Department of Taxes. File and Pay Vermont grants an automatic six-month extension to October 15 if you have been approved for a federal extension. The extension gives you more time to file the paperwork, but any tax owed must still be paid by the original April deadline to avoid interest and penalties.

Quarterly Estimated Payments

If your Vermont income isn’t subject to withholding, or if withholding won’t cover at least 90% of what you’ll owe, you’re expected to make quarterly estimated payments. This applies most often to nonresidents with Vermont rental income, business income, or property sale gains.11Vermont Department of Taxes. Estimated Income Tax You can base your quarterly payments on either 100% of last year’s Vermont tax liability or 90% of the current year’s expected liability.

Avoiding Double Taxation

Vermont has no reciprocity agreements with neighboring states, so nonresidents whose home state also taxes the same income need to look to their home state for relief. Most states allow residents to claim a credit for income taxes paid to another state, which offsets the overlap.

Vermont does maintain its own credit for taxes paid elsewhere under 32 V.S.A. § 5825, but that credit runs the other direction. It’s available to Vermont residents who paid tax to another state on income earned there.12Vermont General Assembly. Vermont Code 32 Chapter 151 Section 5825 – Credit for Taxes Paid to Other States and Provinces As a nonresident filing in Vermont, you’ll generally claim your relief on the home state return, not on Vermont’s. Most home states require you to attach a copy of the Vermont return as proof of the tax paid.

Penalties for Late Filing or Nonpayment

Missing deadlines gets expensive, and Vermont assesses separate penalties for failing to file and failing to pay. They can stack:

  • Late filing: 5% of unpaid tax for each month or partial month the return is overdue. Returns filed more than 60 days past the due date also trigger a flat $50 late filing penalty even if no tax is owed.
  • Late payment: 1% of the unpaid tax per month for individual income tax.
  • Maximum civil penalty: 25% of the unpaid tax due.
  • Interest: Charged from the original due date at a rate set annually. For 2026, the rate is 7.75%.13Vermont Department of Taxes. Interest and Penalties

An extension protects you from late-filing penalties during the extension period, but it does not pause interest or late-payment penalties on any balance due. If you expect to owe Vermont tax, pay your best estimate by April 15 even if the return itself isn’t ready.