RefundAtlas

Vermont Tax Guide: Progressive Brackets & Credits

Navigate Vermont's progressive income tax brackets, property taxes, and available credits for the 2025 tax year.

8.75%
Top Income Tax Rate
6.36%
Combined Sales Tax
1.83%
Property Tax Rate
#7
Tax Burden Rank

Tax Overview

Vermont has a progressive income tax system with four brackets and a top rate of 8.75%, making it one of the higher-tax states in the nation. The top rate applies to income above approximately $229,500 for single filers. Vermont closely follows the federal tax code for its base definitions, using federal taxable income as the starting point for state calculations.

Sales tax in Vermont is moderate at 6% with a 1% local option in a few areas. The state exempts groceries, clothing, and prescription drugs from sales tax. Vermont also imposes a meals and rooms tax of 9% on prepared food and lodging, which particularly affects the tourism and hospitality industry.

Property taxes in Vermont are among the highest in New England, with effective rates around 1.83%. Education property taxes are a significant component, as Vermont uses a statewide education tax system rather than purely local funding. The state offers an income-based property tax adjustment (circuit breaker) that is one of the most generous in the nation, providing substantial property tax relief for low and moderate-income homeowners and renters. Vermont also provides a renter rebate program.

Income Tax

Vermont has the seventh-highest top income tax rate in the nation at 8.75%. The state offers generous property tax assistance to offset the combined burden.

Income RangeTax Rate
$0 – $45,4003.35%
$45,401 – $110,0506.60%
$110,051 – $229,5007.60%
$229,501 +8.75%

Sales Tax

State Rate6.00%
Avg. Local Rate0.36%
Combined Rate6.36%

Property Tax

Effective Rate1.83%
Median Annual Bill$4,893

Key Deductions in Vermont

  • ✓Vermont standard deduction matching federal amounts
  • ✓Income-based property tax adjustment (circuit breaker)
  • ✓Renter rebate program for qualifying low-income renters
  • ✓Earned income tax credit (38% of federal EITC)
  • ✓Child and dependent care credit
  • ✓Vermont 529 plan contribution credit (10% of contributions, up to $250)

Filing Information

Filing Deadline: April 15

Tax Authority: Vermont Department of Taxes

Phone: (802) 828-2865

Website: https://tax.vermont.gov

Frequently Asked Questions

What is Vermont's property tax adjustment?
Vermont offers an income-based property tax adjustment that reduces property taxes for homeowners whose taxes exceed a certain percentage of household income. This circuit breaker program is one of the most generous in the nation and can provide thousands of dollars in relief.
Does Vermont tax Social Security?
Vermont follows the federal treatment of Social Security benefits but provides an exemption for lower-income residents. Single filers with AGI below $50,000 and joint filers below $65,000 can fully exempt their Social Security benefits.
Is clothing taxed in Vermont?
No, Vermont exempts all clothing from the 6% sales tax. Groceries and prescription drugs are also exempt, reducing the sales tax burden on essential purchases.
How does Vermont fund education?
Vermont uses a statewide education property tax system rather than purely local funding. This creates more equitable school funding but also contributes to the state's high overall property tax rates.

Neighboring State Guides

New HampshireMassachusettsNew York

Ready to file your Vermont taxes?

Compare tax software that supports VT state filing.

Compare Tax Software