Vermont Income Tax Calculator

How to Use This Vermont Income Tax Calculator

This Vermont income tax calculator estimates your annual state and federal tax liability for 2025 and 2026. Enter your gross wages, filing status, number of exemptions, and any pre-tax deductions above. Results show Vermont state income tax, federal income tax, FICA, your total tax burden, and effective rates at both the state and federal level.

This tool focuses on your annual tax picture. For a per-paycheck breakdown, use the Vermont paycheck calculator. To compare Vermont's tax burden against other states, use the income tax calculator and switch the state selector.

How Vermont State Income Tax Works

Vermont uses a four-bracket progressive systemfor 2026. Like the federal system, only the dollars within each bracket are taxed at that bracket's rate — your marginal rate applies to the next dollar earned, while your effective rate (total tax ÷ income) is always lower.

Vermont also allows a state standard deduction and personal exemptions that reduce taxable income before brackets apply — making the effective rate significantly lower than the marginal rate for most filers.

Vermont Single Filer Brackets (2026)

• 3.35% — on Vermont taxable income up to $49,400
• 6.6% — on income from $49,401 to $119,700
• 7.6% — on income from $119,701 to $249,700
• 8.75% — on income above $249,700

Vermont Deductions and Exemptions

• Standard deduction — $7,300 (single), $14,600 (MFJ), $10,950 (head of household). Applied before brackets.
• Personal exemption — $4,850 per taxpayer and per spouse. Reduces VT taxable income further after the standard deduction.
• Dependent exemption — $4,850 per qualifying dependent (child or other qualifying person).

Federal Income Tax — Applied on Top of Vermont Tax

Vermont residents owe both Vermont state income tax and federal income tax. Federal tax uses a separate progressive bracket system with its own standard deduction ($16,100 for single filers in 2026) and brackets that differ from Vermont's.

• 10% on the first $12,400 of taxable income
• 12% on $12,400–$50,400
• 22% on $50,400–$105,700
• 24% on $105,700–$201,775
• 32% on $201,775–$256,225
• 35% on $256,225–$640,600
• 37% above $640,600

Note that Vermont's standard deduction ($7,300 single) is significantly smaller than the federal standard deduction ($16,100 single) — meaning more of your income is taxable at the state level than at the federal level, even before considering Vermont's rates.

FICA Taxes — Social Security and Medicare

FICA taxes apply to every Vermont paycheck and are separate from both state and federal income tax.

• Social Security: 6.2% on wages up to $176,100 (2025) or $184,500 (2026). No further withholding once you hit the wage base.
• Medicare: 1.45% on all wages with no cap.
• Additional Medicare: 0.9% on wages above $200,000 (single) or $250,000 (married jointly) — employee only, no employer match.

Self-employed Vermont residents pay the full 15.3% self-employment tax on net earnings, but can deduct the employer-equivalent half to reduce both federal and Vermont taxable income.

Annual Tax Example — $75,000 Vermont Single Filer (2026)

1. Gross income: $75,000
2. VT standard deduction: −$7,300 → $67,700
3. VT personal exemption: −$4,850 → VT taxable income: $62,850
4. VT tax calculation: 3.35% × $49,400 ($1,655) + 6.6% × $13,450 ($888) = ~$2,543 Vermont state income tax
5. Federal taxable income: $75,000 − $16,100 standard deduction = $58,900. Federal income tax: ~$5,765.
6. FICA: 7.65% × $75,000 = $5,738.
7. Total taxes: ~$14,046. Net income: ~$60,954/year. Effective combined rate: ~18.7%.

How to Reduce Your Vermont Annual Tax Liability

Pre-tax payroll deductions reduce both federal and Vermont taxable income simultaneously, creating a compounded tax savings.

• Maximize traditional 401(k) contributions— the 2026 limit is $23,500 ($31,000 if age 50+). For a filer in Vermont's 6.6% bracket and the 22% federal bracket, each $1,000 contributed saves $286 in total income tax (22% federal + 6.6% VT + avoids FICA on payroll contributions).
• Contribute to an HSA — if enrolled in a high-deductible health plan, the 2026 limit is $4,300 (self-only) or $8,550 (family). Vermont honors HSA contributions as pre-tax, reducing both federal and state taxable income.
• Claim all Vermont exemptions — every qualifying dependent adds $4,850 to your exemption total, saving $160–$425 in Vermont state tax per dependent depending on your bracket.
• Use a Dependent Care FSA — up to $5,000 per household in pre-tax dollars reduces both federal and Vermont taxable income.
• Consider itemizing on Vermont — Vermont generally follows federal itemized deduction rules. If your mortgage interest, charitable donations, and other deductible expenses exceed $7,300, itemizing may reduce your Vermont tax more than the standard deduction.

Retirement Income and Vermont Taxes

Vermont's treatment of retirement income is more nuanced than many states and has significant implications for retirees planning their finances.

• Social Security benefits — partial exemption: Vermont partially exempts Social Security income. If your federal adjusted gross income (AGI) is under $45,000 (single) or under $60,000 (married filing jointly), Social Security benefits are fully exempt from Vermont income tax. Above those thresholds, the exemption phases out and Social Security becomes partially taxable up to the federal inclusion rate. This means moderate-income retirees in Vermont may owe nothing on their Social Security, while higher-income retirees will owe some Vermont tax on it.
• Military retirement pay — fully exempt: Vermont fully exempts military retirement income from state income tax, making it attractive for veterans who receive military pensions.
• 401(k) and IRA distributions — fully taxable: Distributions from traditional 401(k) plans, traditional IRAs, and most private pensions are taxable in Vermont at the regular progressive bracket rates (3.35%–8.75%). Unlike some states, Vermont does not offer a blanket retirement income exclusion for non-military pension income.
• Roth IRA withdrawals — tax-free: Qualified Roth IRA withdrawals are not subject to Vermont income tax, consistent with federal treatment.

Vermont Tax Credits and Deductions

Vermont offers several notable credits and deductions that can reduce your annual tax liability. These are claimed on the annual Vermont Form IN-111 return.

• Vermont Earned Income Tax Credit (EITC): Vermont offers its own EITC equal to 38% of the federal EITC— one of the highest state EITC match rates in the country. This credit is refundable, meaning you receive it even if it exceeds your Vermont tax liability. For a family with three qualifying children, the federal EITC in 2026 can reach roughly $7,830; Vermont's 38% match adds up to approximately $2,975 in additional refundable credit.
• Personal and dependent exemptions: Vermont allows a $4,850 exemption per taxpayer, spouse, and qualifying dependent. These reduce Vermont taxable income before brackets apply.
• Vermont Higher Education Investment Plan deduction:Contributions to Vermont's 529 college savings plan may be deductible from Vermont taxable income.
• Vermont Renter Rebate: Low-income Vermont renters may qualify for the Vermont Renter Rebate program, which provides a rebate on rent paid. Income and rent thresholds apply.
• Vermont Child and Dependent Care Credit: Vermont conforms generally to the federal child and dependent care credit, providing additional relief for working families with qualifying childcare expenses.

Vermont Form IN-111 — Filing Deadline

Vermont residents file their annual state income tax return on Vermont Form IN-111. The filing deadline is April 15 — the same as the federal return. An automatic extension to October 15 is available, but any tax owed must still be paid by April 15 to avoid penalties and interest. The Vermont Department of Taxes accepts e-filing through approved software.

Tax Disclaimer

This calculator provides estimates for informational purposes only. It is not tax advice. Vermont state tax brackets, exemption amounts, standard deduction values, and federal rules can change annually. Results reflect 2025 and 2026 tax-year parameters based on Vermont Department of Taxes publications and IRS publications current at time of publication. Consult a qualified Vermont-licensed CPA or tax professional for guidance on your specific situation.