Taxes in Vermont: State Tax Guide 2026
Data Notice: Figures, rates, and statistics cited in this article are based on the most recent available data at time of writing and may reflect projections or prior-year figures. Always verify current numbers with official sources before making financial, medical, or educational decisions.
Taxes in Vermont: State Tax 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 has one of the highest overall tax burdens in the nation, with a progressive income tax topping at 8.75%, a 6.00% sales tax, and property taxes well above the national average. The state uses an education funding system that ties property taxes directly to school spending, creating wide variation in effective rates by town. Vermont compensates with generous programs for low-income residents, including an income-sensitivity adjustment for property taxes and a robust earned income tax credit.
Vermont Income Tax Rates (2026)
Vermont uses a progressive income tax system with four brackets. Rates for single filers:
| Tax Rate | Taxable Income Range |
|---|---|
| 3.35% | $0 – ~$45,400 |
| 6.60% | ~$45,401 – ~$110,050 |
| 7.60% | ~$110,051 – ~$229,550 |
| 8.75% | Over ~$229,550 |
Married filing jointly thresholds are approximately double these amounts.
Vermont’s brackets are indexed for inflation annually.
Vermont Standard Deduction (2026)
Vermont conforms to the federal standard deduction:
| Filing Status | Amount |
|---|---|
| Single | ~$15,000 |
| Married Filing Jointly | ~$30,000 |
| Head of Household | ~$22,500 |
Vermont phases out the standard deduction for higher-income taxpayers, beginning at AGI of ~$105,400 (single) and ~$210,800 (married filing jointly).
Notable Vermont Tax Credits
- Earned Income Tax Credit: Refundable state EITC equal to 38% of the federal credit — one of the most generous state EITCs in the nation
- Child and Dependent Care Credit: 24% of the federal credit for qualifying expenses
- Vermont Child Tax Credit: ~$1,000 per qualifying child under 6 for families with income under ~$125,000
- Low-Income Heating Fuel Credit: Refundable credit to help offset heating costs
- Clean Energy Credits: Credits for residential solar installations and energy efficiency improvements
- Historic Rehabilitation Credit: 10% of qualified rehabilitation expenditures for certified historic properties
Sales Tax
| Component | Rate |
|---|---|
| State base rate | 6.00% |
| Local option tax | 1.00% (where adopted) |
| Maximum combined rate | 7.00% |
Municipalities can impose an additional 1% local option tax. Burlington and several other towns have adopted this, bringing the combined rate to 7.00%.
Exempt from sales tax: Groceries, prescription medications, clothing, and fuel for residential heating.
Meals and rooms tax: 9.00% on restaurant meals, 10.00% on alcoholic beverages served in restaurants, and 9.00% on hotel rooms.
Property Tax
| Metric | Amount |
|---|---|
| Average effective rate | ~1.83% |
| National average | 0.99% |
Vermont has the fourth-highest effective property tax rate in the nation. Property taxes are the primary funding mechanism for education, and the state’s education tax rate varies by town based on per-pupil spending.
Education Property Tax and Income Sensitivity
Vermont uses a unique “income sensitivity” system: homeowners with household income below ~$138,500 can have their education property taxes calculated based on income rather than home value. This effectively caps education property taxes at ~2.0%–2.5% of household income for qualifying residents.
Exemptions and Programs
- Homestead declaration: Required to qualify for the education tax rate and income sensitivity
- Income sensitivity adjustment: Caps education property taxes based on household income for qualifying residents
- Veterans exemption: ~$10,000 off assessed value for qualifying veterans
- Current Use program: Enrolled agricultural and forest land is assessed at its current use value rather than development value
Example: A home valued at $350,000 at the ~1.83% effective rate pays approximately ~$6,405 in annual property taxes. A household earning ~$60,000 using income sensitivity might pay ~$1,200–$1,500 in education taxes instead of the full assessed amount.
How Vermont Compares to National Averages
| Tax Type | Vermont | National Average |
|---|---|---|
| Top income tax rate | 8.75% | ~5.0% |
| Effective rate (~$75K single) | ~5.4% | ~3.5% |
| Sales tax (combined avg) | ~6.22% | 6.6% |
| Property tax (effective) | ~1.83% | 0.99% |
| Overall tax burden rank | Top 5 highest | — |
Who Benefits from Living in Vermont
Vermont may work well for:
- Low-income families — The 38% state EITC is among the nation’s highest, combined with the Child Tax Credit and income-sensitive property tax
- Low- to moderate-income homeowners — The income sensitivity adjustment can dramatically reduce property tax liability
- Families with young children — The ~$1,000 Child Tax Credit for children under 6 provides meaningful support
- Shoppers — Groceries, clothing, and heating fuel are all exempt from sales tax
- Rural landowners in Current Use — Agricultural and forest land is assessed at use value, significantly reducing taxes
Vermont may be costly for:
- High earners — The 8.75% top rate is the seventh highest in the nation
- Homeowners above the income sensitivity threshold — Without income sensitivity, the ~1.83% effective property tax rate is substantial
- Diners and tourists — The 9% meals tax and 9% rooms tax add up quickly
- Moderate-to-high income earners — The 6.60% rate starts at just ~$45,400, pushing moderate earners into relatively high brackets
Vermont-Specific Considerations
- Social Security exemption (income-based) — Vermont exempts Social Security benefits from state tax for filers with AGI below ~$50,000 (single) or ~$65,000 (married filing jointly); partial taxation above these thresholds
- No broad pension exclusion — Unlike some New England states, Vermont does not offer a general exclusion for pension or retirement income
- State estate tax — Vermont imposes an estate tax on estates exceeding ~$5 million, with a flat rate of 16% on amounts above the threshold
- Education funding — Vermont’s education tax system means property tax rates vary dramatically by town based on school spending decisions
- Homestead declaration requirement — Vermont homeowners must file a Homestead Declaration annually to qualify for the resident education tax rate and income sensitivity
- Meals and rooms tax — 9% rate on meals and lodging is a significant cost for tourists and frequent diners
Key Takeaways
- Vermont’s top income tax rate of 8.75% places it among the highest-tax states for high earners
- Property taxes at ~1.83% are the fourth highest nationally, but income sensitivity can dramatically reduce the bill for qualifying homeowners
- Sales tax at 6.00% exempts groceries, clothing, and heating fuel — easing the burden on essentials
- The 38% state EITC is among the most generous in the country, and the Child Tax Credit provides additional family support
- Social Security is exempt for most filers below income thresholds
- Vermont imposes an estate tax on estates over ~$5 million at a flat 16%
Next Steps
- See how Vermont compares at State Income Tax Comparison: All 50 States Ranked
- Calculate your federal bracket with the Tax Bracket Calculator 2026
- Explore deductions available to you — Tax Deductions You’re Probably Missing (Itemized vs Standard)
- Find a Vermont CPA — Find a CPA Near You
- Consider tax-efficient strategies — Tax Planning Consultation