Taxes in Vermont


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Vermont - State

Despite being neighbors with one of the most tax-friendly states (New Hampshire), Vermont taxes extend far and wide. You’ll need to save a good portion of your income to account for your tax bill each year. Below, we explain various Vermont state taxes affecting retirement income, such as sales tax, inheritance tax, and property taxes.

For information regarding taxes in other states, see Retirement Taxes by State.

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Vermont Tax Rates

State Sales Tax6%
Avg State/Local Sales Tax6.24%
Gas Tax$0.32 per gallon
Diesel Tax$0.34 per gallon
Cigarette Tax$3.08 per pack
Income Tax8.75%
Effective Tax Rate:6.09%
Property Tax1.90%
Social Security TaxPartial
Medical/Dental Deduction:None
Federal Income Tax Deduction:None
Retirement TaxPartial
State Taxes in Vermont

Vermont State Taxes Explained

Vermont Sales Tax

6%. Medical items, groceries, clothing, prescription and over-the-counter drugs are exempt. Local jurisdictions may add an additional 1%. Tax is 9% on prepared foods, restaurant meals and lodging.

Vermont Income Taxes

Top tax rate of 8.75% (on income over $206,950 for singles and up to $251,950 for joint filers).

Vermont Property Taxes

The property tax in Vermont is 1.90% of assessed value, which amounts to $4,329 on a $277,700 home—the state’s median home value. Taxes include school district and homestead taxes. Each town and union school district has a tax rate based on spending per pupil (property tax rates by down are published here). If a town includes multiple school districts, the tax rate is combined from each district.

Residents are required to file a Homestead Declaration annually. Non-homestead properties are taxed at a higher rate, so filing the declaration is vital.

Eligible Vermont residents can claim a rebate of their school and municipal property taxes if their household income does not exceed a certain level. The household income limit for the Vermont Property Tax Adjustment was $136,900 in 2021. This amount fluctuates with annual adjustments.

For more information, Vermont’s tax credit page.

Vermont Retirement Taxes

Social Security benefits are taxed for single filer income greater than $45,000 annually or over $60,00 for joint filers. Out-of-state government pensions and other retirement income are taxed at rates from 3.35% to 8.75%.

Those who qualify for the federal Credit for the Elderly or the Disabled are entitled to a tax credit. Qualifications include retired with disability income, permanent and total disability, age 65 or older and certain income limits. The Vermont tax credit is 24% of the federal credit.

Exemptions for retired military personnel follow federal rules. A veteran must be classified as 50% or higher disabled, receive a non-service improved pension or be receiving military retirement pay for a permanent medical military retirement.

Vermont Estate and Inheritance Taxes

Although Vermont does not have an inheritance tax, it has a flat estate tax of 16% on estates above $5 million. Vermont’s estate tax page provides current requirements.

For further information, visit the Vermont Department of Taxes.

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