Vermont state tax: Overview
Vermont’s tax system can be a bit tough on some residents. The state has four income tax brackets and still taxes Social Security benefits for certain filers.
Property taxes are on the higher side, and Vermont also has an estate tax to consider.
On the positive side, the sales tax rate is about average, and many everyday essentials are exempt, which helps soften the impact for shoppers.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Vermont income tax
Vermont has a graduated state individual income tax rate ranging from 3.35% to 8.75%, according to the Tax Foundation.
Vermont retirement taxes
Vermont tax on retirement benefits: Social Security benefits are exempt for joint filers with an adjusted gross income (AGI) of $65,000 or less.
Additionally, Vermont offers a deduction of up to $10,000 for some types of retirement income. However, income requirements apply. Railroad Retirement benefits are tax-exempt in Vermont.
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Tax on Taxable Income: Low of 3.35% (on up to $45,400 for single filers and $75,850 for joint filers) and a high of 8.75% (on more than $229,550 for single filers and $279,450 for joint filers)
- Social Security: Partially taxable
- Pensions: Partially taxable
- 401(k) and IRA Distributions: Taxable
Vermont sales tax
Vermont's state sales tax rate is 6%. Localities can add up to 0.37% in additional sales taxes.
However, the average combined sales tax rate in Vermont is 6.37%, according to the Tax Foundation. Several types of products are exempt from sales tax.
- Groceries: Exempt
- Clothing: Exempt
- Prescription drugs: Exempt
How much are Vermont property taxes?
Vermont has an average effective property tax rate of 1.42%.
Vermont Property Tax Breaks for Retirees
Vermont offers a property tax credit of up to $8,000 to eligible homeowners. Homeowners must meet all of the following requirements to qualify for the credit in 2025.
- Your property must qualify as a homestead (as of April 1), and you must have filed a Homestead Declaration for the current year's grand list.
- You must have been domiciled in Vermont for all of the previous calendar year.
- You must not have been claimed as a dependent on a 2024 tax return.
- Your household income must not have exceeded $115,000 in 2024.
Vermont gas tax
Gasoline |
$0.12 per gallon |
Diesel |
$0.28 per gallon |
Vermont taxes on alcohol and tobacco
Product |
Tax Amount |
|---|---|
Cigarettes |
$3.08 per pack |
Cigars |
$20-$40 per 10 cigars |
Tobacco/Snuff |
$2.57 per ounce |
Medical Marijuana |
6% |
Recreational Marijuana |
20% (6% cannabis sales tax + 14% state excise tax) |
Source: Sales Tax Handbook
Product |
Tax Amount |
|---|---|
Wine |
$0.55 per gallon |
Beer |
$0.26 per gallon |
Liquor |
state-controlled |
Source: Sales Tax Handbook
Vermont estate and inheritance taxes
Vermont has an estate tax with an exemption of $5 million. The tax rate is a flat 16%.
