Vermont state tax rates run across several separate systems: individual income is taxed on four brackets from 3.35% to 8.75%, retail sales carry a 6% tax, prepared meals and short-term lodging are taxed at 9% (with 10% on alcoholic drinks served at licensed establishments), public schools are funded by a statewide property tax split between homestead and nonhomestead rates, corporations pay 6% to 8.5% on net income, and estates above $5 million face a flat 16%. The sections below give the current rates, who owes them, and the thresholds that change what you pay.
Personal Income Tax
Vermont’s income tax uses four marginal brackets, so each slice of your taxable income is taxed at a progressively higher rate.1Vermont General Assembly. Vermont Code 32-5822 – Tax on Income of Individuals, Estates, and Trusts The rates are:
- 3.35% on the lowest tier of taxable income
- 6.60% on the next tier
- 7.60% on the third tier
- 8.75% on income above the top threshold
The dollar amount where each bracket begins depends on your filing status, and the Department of Taxes republishes the schedule each year with inflation adjustments.2Vermont Department of Taxes. Vermont Rate Schedules and Tax Tables Residents owe the tax on all income; nonresidents owe it on Vermont-sourced income.
Standard Deduction and Personal Exemption
Your Vermont calculation begins with federal adjusted gross income, then applies state-specific adjustments. For tax year 2025 the standard deduction is $7,650 for single or married filing separately, $15,300 for married filing jointly or qualifying widow(er), and $11,450 for head of household. Taxpayers who are 65 or older or blind get an extra $1,250. The personal exemption is $5,300.3Vermont Department of Taxes. Filing Season FAQs Check the department’s current-year figures before filing, since these numbers move each year.
Sales and Use Tax
The state sales tax is 6%, charged on most retail purchases of tangible goods.4Vermont General Assembly. Vermont Code 32-9771 – Imposition of Sales Tax The matching use tax applies at the same 6% when you buy taxable goods out of state and bring them into Vermont without paying sales tax at purchase.
Groceries for home consumption and clothing are exempt. So are prescription drugs, medical equipment, and prosthetic devices.5Vermont General Assembly. Vermont Code 32-9741 – Sales Not Covered Electronics, furniture, and most other household goods are fully taxable.
Local Option Tax
A municipality can vote to add a 1% local tax on sales, a 1% tax on meals and alcoholic drinks, and a 1% tax on room rentals. Not every town has adopted them; each requires a majority at town meeting.6Vermont General Assembly. Vermont Code 24-138 – Local Option Taxes Where the local sales option is in effect, the combined rate on taxable goods is 7%.
Remote Sellers
Out-of-state sellers must register and collect Vermont sales tax once they exceed either $100,000 in gross revenue from Vermont sales or 200 separate Vermont transactions in the prior 12 months.7Vermont Department of Taxes. Sales Tax and Wayfair – Frequently Asked Questions The rule applies to direct sellers and online marketplaces alike.
Meals, Rooms, and Short-Term Rentals
Prepared food, lodging, and alcoholic drinks are taxed under a separate system at higher rates:
- 9% on prepared meals and non-alcoholic beverages sold for immediate consumption
- 9% on short-term lodging (stays of fewer than 30 consecutive days)
- 10% on alcoholic drinks served at licensed establishments
These rates apply at hotels, restaurants, bars, and bed-and-breakfasts, and any 1% local option tax stacks on top in towns that have adopted it.8Vermont General Assembly. Vermont Code 32-9241 – Imposition of Tax
Short-Term Rental Surcharge
Since August 2024, a 3% surcharge sits on top of the 9% rooms tax for short-term rentals, bringing the total to at least 12%, or 13% where a local option rooms tax applies.9Vermont General Assembly. Vermont Code 32-9301 – Imposition; Short-Term Rental Impact Surcharge The surcharge does not apply to hotels and other lodging establishments licensed by the Vermont Department of Health.
Renting exclusively through a platform like Airbnb or Vrbo means the platform handles collection and remittance. Taking any bookings outside a registered platform (your own website, direct inquiries) means you must register with the Department of Taxes and collect the tax yourself on those stays.10Vermont Department of Taxes. Short-Term Rentals All rental income still gets reported on your Vermont personal income tax return.
Education Property Tax
Vermont funds public schools through a statewide property tax rather than local school district levies. Every property is classified as homestead (your primary residence) or nonhomestead (second homes, commercial buildings, rentals).11Vermont General Assembly. Vermont Code 32-5402 – Education Property Tax Liability
For fiscal year 2026, the nonhomestead education tax rate is $1.703 per $100 of property value. The homestead base rate is $1.00 per $100, but each town’s actual homestead rate varies with per-pupil spending and a statewide property yield of $8,596.12Vermont Department of Taxes. Education Tax Rate Calculations – Frequently Asked Questions Towns that spend more per pupil carry higher homestead rates. All rates are further adjusted through a Common Level of Appraisal so properties are taxed on fair market value instead of outdated local assessments.
Owners of a qualifying primary residence must file a homestead declaration every year by the April filing deadline. Miss it and the home gets taxed at the nonhomestead rate, with the municipality allowed to add a penalty of up to 3% of the education tax.13Vermont General Assembly. Vermont Code 32-5410 – Declaration of Homestead Lower-income households may qualify for property tax credits, but only if the declaration is filed.
Property Transfer Tax
When Vermont real estate changes hands, the buyer owes a transfer tax based on the price paid. The general rate is 1.25% of value, plus a 0.22% clean water surcharge. If the property will be your primary residence, the rate drops to 0.5% on the first $200,000 (no clean water surcharge on that portion), then reverts to 1.25% plus the 0.22% surcharge on any amount above $200,000.14Vermont Department of Taxes. Property Transfer Tax
Vacation homes and other non-principal residences fit for year-round use face a much steeper rate: 3.40%, plus the 0.22% surcharge, for a combined 3.62%. On a $400,000 second home that comes to $14,480. The tax is due within 30 days of closing.
Corporate Income Tax
Corporations doing business in Vermont pay income tax at three marginal rates:15Vermont General Assembly. Vermont Code 32-5832 – Tax on Income of Corporations
- 6% on the first $10,000 of Vermont net income
- 7% on income from $10,001 to $25,000
- 8.5% on income above $25,000
Corporations with no taxable income still owe a minimum tax based on Vermont gross receipts. The minimum starts at $100 for corporations with receipts up to $500,000 and runs through tiers of $500, $2,000, and $6,000 for mid-sized companies, reaching $100,000 for corporations with Vermont gross receipts above $300 million.
Affiliated corporations operating as a single economic unit must file a combined return reporting the group’s combined Vermont net income.16Vermont Department of Taxes. Corporate Income Tax
Estate Tax
Vermont imposes its own estate tax, separate from the federal one. Estates with a gross value above $5,000,000 (including certain gifts made within two years of death) must file a Vermont estate tax return, and the tax is a flat 16% on the amount above that threshold.17Vermont General Assembly. Vermont Code 32-7442a – Vermont Estate Tax Where the federal estate tax uses graduated rates, Vermont applies a single flat percentage.
The return and any payment are generally due nine months after the date of death, matching the federal deadline, and a six-month filing extension is available.18Vermont Department of Taxes. Estate Tax Estates below $5 million owe nothing and do not file.
Motor Vehicle Purchase and Use Tax
Buying a car, motorcycle, motorboat, or motorhome in Vermont triggers a 6% purchase and use tax, calculated on the sale price or the J.D. Power clean trade-in value, whichever is higher. Dealer documentation fees are part of the taxable price. You pay when you register and title the vehicle.19Vermont Department of Motor Vehicles. Vehicle Taxation
Heavy trucks with a curb weight of 10,100 pounds or more are also taxed at 6%, but the tax is capped at $2,486. Short-term vehicle rentals are taxed at 9% instead of 6%.
Cigarette and Motor Fuel Excise
Vermont charges a $3.08 excise tax on each pack of 20 cigarettes.20Vermont Department of Taxes. Cigarette and Tobacco Tax Rates
Gasoline taxes are built from several layered components. Two state assessments collected by the Department of Motor Vehicles are the Motor Fuel Tax Assessment, set at $0.134 per gallon for early 2026, and the Motor Fuel Transportation Infrastructure Assessment, which floats at 2% of the statewide average retail price and sat near $0.05 per gallon in the first quarter of 2026.21Vermont Department of Motor Vehicles. MFTIA and MFTA Quarterly Fees Additional state and federal excise taxes apply on top, so the total tax built into each gallon is higher than those two assessments alone.