Vermont is one of the least tax friendly states in the union. They have high income and business tax. Very high property taxes, and also one of the few states that has an estate tax. In our opinion, the state is spending too much time with its neighbor, New York.
State Taxes at a Glance – Vermont
|Type of Tax||2023|
|Individual Rates||3.35% to 8.75%|
|Corporate / Business Tax Rates||6.00% to 8.25%|
|Gross Receipts Tax||None|
|Sales Tax||6.30% (average)|
|Property Taxes||1.82% as a percentage of primary home|
|Estate or Inheritance Tax||Yes – Estate Tax|
Income Taxes in Vermont
Like most states with income tax, Vermont’s is calculated on a marginal scale, with four (4) tax brackets. It ranges from 3.35% to 8.75%. The highest bracket of 8.75% starts at $216K.
Business Taxes in Vermont
The state of Vermont has a Corporate Tax rate with three (3) tax brackets. It ranges from 6.00% to 8.50%. The highest tax bracket starts at $25,000. Corporate Tax is only assessed on C Corporation. Other flow-thru entities, such as S-Corps, LLCs and LLPs are not subject to the Corporate Tax.
However, you should be aware that the State of Vermont also has a minimum Corporate Tax that is based on Gross Receipts. The tax calculated as follows:
- Less than $2,000,000 – $300 minimum tax
- Less than $5,000,000 – $500 minimum tax
- Greater than $5,000,000 – $750 minimum tax
Sales Taxes – like many states, Vermont has multiple sales tax rates. One at the state level and another at the local level. The state rate is 6.00% the average local rate is 0.30% (total average rate for Vermont Sales Tax is 6.30%). Note, groceries are exempt from sales tax in Vermont.
Property Taxes in Vermont – the average property tax rate for residential property in the state of Vermont is 1.82%. It is the 4th highest in the union as far as Property Tax as a Percent of a taxpayer’s main home (the top three are New Jersey, Illinois, & New Hampshire).
Estate Taxes in Vermont
The state of Vermont has a flat estate tax of 16%.
The first $5,000,000 million of the estate is exempt from tax.
DMV fees Vermont
Vermont has flat fees for vehicle registration. Since they are not based on the vehicles value, they are not deductible. To learn more, here’s a link to the Vermont’s DMV website.
Domicile in Vermont
If you maintain a permanent place of abode for over 183 days, in aggregate, you are considered a Vermont resident.
Social Security Benefits Tax in Vermont
Vermont is one of the few states that taxes Social Security. However, there are exemptions:
- Married filing jointly and you make less than $65,000
- Single and you make less than $50,000
All others must partially pay tax on social security benefits.
Payroll Taxes in Vermont
Payroll (Unemployment Insurance) taxes are paid by business on the behalf of their employees to fund unemployment insurance to the state. It consists of multiple factors. Below is an outline of the most common ones in Vermont –
- Wage Base – Vermont’s wage base is $13,500
- New Employers – UI Contribution Tax is 1.00% for all new employers.
- UI Rates – range from 0.40% to 6.50%
Vermont Business Entities – LLCs
Vermont has an average cost of opening an LLC. Here are some important facts:
- Vermont’s annual LLC fee is $35 a year
- When you register with the state, you pay a one time fee of $125
- Secretary of State of Vermont – click here
Vermont Tax Contact Phone Numbers
Important phone numbers for the Vermont Department of Taxation:
- Website: tax.vermont.gov
- Phone# for Individuals – (802) 828-2865
- Phone# for Businesses – (802) 828-5723