Vermont Income Tax Calculator
Tax Breakdown
Vermont Tax Overview
Vermont Income Tax Brackets 2026
Vermont has the highest income tax rates in New England with a progressive four-bracket system. The top marginal rate of 8.75% places Vermont among the top ten highest income tax rates in the nation. Vermont uses federal taxable income as the starting point for calculating state tax, conforming to federal deductions and exemptions.
| Taxable Income (Single) | Rate | Taxable Income (MFJ) | Rate |
|---|---|---|---|
| $0 – $45,400 | 3.35% | $0 – $76,000 | 3.35% |
| $45,400 – $110,450 | 6.60% | $76,000 – $184,400 | 6.60% |
| $110,450 – $229,550 | 7.60% | $184,400 – $279,450 | 7.60% |
| $229,550+ | 8.75% | $279,450+ | 8.75% |
Vermont Deductions and Credits
Vermont conforms to the federal standard deduction, meaning single filers can deduct approximately $15,000 and married filers $30,000 for 2026. The state also offers its own earned income tax credit (EITC) at 38% of the federal EITC, one of the most generous state-level EITCs in the country. Additional credits include a child and dependent care credit and a low-income property tax credit.
Vermont Sales Tax
Vermont's state sales tax rate is 6%. Municipalities may impose an additional local option tax of up to 1%, bringing the combined rate to as high as 7% in certain areas. Burlington, the state's largest city, charges the maximum 7% combined rate.
Vermont Sales Tax Exemptions
- Groceries — Exempt from sales tax (unprepared food)
- Clothing — Exempt from sales tax (all clothing and footwear)
- Prescription medications — Exempt
- Medical equipment — Exempt
- Prepared food — Subject to 9% meals and rooms tax
- Lodging — Subject to 9% meals and rooms tax (plus local options)
Vermont's exemption of both groceries and clothing from sales tax provides meaningful relief, especially for lower-income households. The separate 9% meals and rooms tax applies specifically to restaurants, bars, and hotels, generating significant revenue from Vermont's tourism industry.
Vermont Property Tax
Vermont's effective property tax rate of approximately 1.73% is among the highest in the nation, ranking in the top ten of all states. Property taxes are the primary funding mechanism for Vermont's education system through a unique state-level education finance system.
Vermont Education Property Tax
Vermont uses a distinctive education funding formula where property tax rates are set based on each school district's per-pupil spending. The statewide education property tax has two components:
- Homestead rate — Variable rate based on school district spending (typically $1.50-$2.00+ per $100 of assessed value)
- Non-residential rate — Flat rate set by the legislature (approximately $1.58 per $100)
Vermont also offers an income-based property tax adjustment (commonly called the property tax credit) for homeowners with household income below approximately $138,500. This adjustment effectively caps property taxes as a percentage of income, providing significant relief for lower and middle-income homeowners.
Vermont: Highest Income Tax in New England
Vermont's 8.75% top marginal rate makes it the highest income tax state in all of New England, surpassing even Massachusetts (which added a 4% surtax on millionaires in 2023, making its effective top rate 9% only for income over $1 million). For income levels below $1 million, Vermont's top rate is the highest in the region. Here is how Vermont compares to its New England neighbors:
| State | Top Rate | Threshold |
|---|---|---|
| Vermont | 8.75% | $229,550 (single) |
| Connecticut | 6.99% | $500,000 |
| Maine | 7.15% | $58,050 |
| Massachusetts | 5% (9% over $1M) | All income / $1M |
| Rhode Island | 5.99% | $176,050 |
| New Hampshire | 0% | N/A |
Vermont vs. Neighboring States
- New Hampshire — No income tax, no sales tax, but ~1.86% property tax. The starkest contrast in the US: two bordering states with completely opposite tax philosophies. NH residents pay more in property tax but nothing in income or sales tax.
- New York — Graduated 4%-10.9% income tax, 4% state sales tax + local, 1.40% property tax. NY has a higher top income rate but lower property taxes. NYC residents face additional city income tax.
- Massachusetts — 5% flat rate (9% on income over $1M), 6.25% sales tax, 1.15% property tax. Lower overall tax burden for most income levels.
Use our state comparison calculator to see exact differences for your income level.
Frequently Asked Questions
Vermont has four brackets: 3.35%, 6.60%, 7.60%, and a top rate of 8.75% on income over $229,550 (single). This is the highest income tax rate in New England.
Vermont's state rate is 6% with local options up to 1% (max 7%). Groceries, clothing, and prescriptions are exempt. A separate 9% meals and rooms tax applies to restaurants and hotels.
At ~1.73%, Vermont property tax is among the highest nationally. Property tax is the primary education funding mechanism. An income-based adjustment caps property taxes for households earning under ~$138,500.
Vermont exempts Social Security for single filers with AGI under $50,000 and married filers under $65,000. Partial exemptions exist up to $60,000/$75,000. Above that, federal rules apply.
Polar opposites: NH has no income tax and no sales tax but ~1.86% property tax. VT has 8.75% top income tax, 6% sales tax, and 1.73% property tax. For wage earners, NH is significantly cheaper.