Vermont Paycheck Calculator & Income Tax Rates (2026)

Vermont applies 4 rates to taxable income — that is, income after the state standard deduction or exemption. Only the slice of income inside each band is taxed at that band's rate.

Vermont's effective state rate climbs with income as more of your salary lands in higher bands. The last column shows the state rate on your next dollar at each level.

Vermont's joint brackets widen the bands for couples, so the same household income is taxed more lightly. On $100,000 a joint return keeps $82,199 versus $74,907 for a single filer.

Vermont taxes income through four graduated brackets — 3.35%, 6.6%, 7.6% and 8.75% — with thresholds indexed to inflation each year, and the 8.75% top rate begins at roughly $242,000 of taxable income for single filers, making it one of the steepest schedules in the Northeast. Since decoupling from federal taxable income in 2018, Vermont starts from federal adjusted gross income and applies its own standard deduction and personal exemptions rather than the federal ones. Capital gains are taxed as ordinary income, softened only by a small exclusion: the greater of $5,000 or 40% of gains on certain assets held more than three years, capped at 40% of federal taxable income. What sets Vermont apart is not the rate table but what surrounds it — an income-sensitized education property tax, a refundable child tax credit of $1,000 per child under six, and an earned income credit set at 38% of the federal amount, one of the most generous in the country. Rates are unchanged for 2026.

Vermont's standard deduction is roughly $7,400 for single filers and $14,850 for joint filers, indexed annually, plus a personal exemption of about $5,100 per person. Itemized deductions were eliminated in 2018; in their place is a charitable contribution credit worth 5% of donations up to $20,000. The refundable earned income credit is 38% of the federal credit, and the child tax credit pays $1,000 per child under six for families with income up to $125,000, phasing out above that.

No Vermont city or town levies an income or wage tax; municipalities are limited to property taxes and the 1% local option sales, meals and rooms taxes. The only locality-based income measure is the education property tax, which is set statewide but varies by town spending.

The state sales tax is 6%, and about 30 municipalities — Burlington, South Burlington, Williston, Stowe, Killington and others — add a 1% local option tax for 7%. Groceries, most clothing and prescription drugs are exempt; restaurant meals carry a separate 9% meals tax and alcoholic drinks 10%, plus the same 1% local option where it applies. Soft drinks lost their grocery exemption in 2015.

Vermont has one of the heaviest property tax burdens in the country, with an effective rate near 1.8% of market value, driven by a statewide education property tax that funds schools. Homestead rates are lower than nonhomestead rates, and households with income under roughly $128,000 can claim a property tax credit that caps the education portion at a percentage of income — a relief mechanism most states lack. Above that income the full bill applies, and it rose sharply after a 2024 spike in education spending.

Vermont is one of eight states that still taxes Social Security, but the exemption is income-based and broad: benefits are fully exempt for single filers with adjusted gross income up to $50,000 and joint filers up to $65,000, then phase out over the next $10,000 of income, above which benefits are taxed to the same extent as federally. Pensions, annuities and 401(k) or IRA withdrawals are fully taxable at ordinary rates with no age-based exclusion. Military retirement pay and federal Civil Service Retirement System pensions each qualify for a $10,000 exemption for income-eligible retirees under a 2022 law. The practical line is $50,000 of income: a retiree below it pays Vermont nothing on Social Security, while one drawing $90,000 from an IRA pays the full 6.6% marginal rate on most of it.

Vermont is kindest to families with young children and to retirees of modest means: a couple with two toddlers and $90,000 of income collects $2,000 in child credits, and a retiree living on $45,000 of Social Security and a small pension owes little or nothing. High earners fare worst — the 8.75% top rate lands on a $300,000 salary and there is no deduction for federal tax. Homeowners under the income-sensitivity threshold have their school tax capped; those above it pay one of the highest property bills in the nation. No local income tax, and Vermont has no reciprocity agreements, so residents who commute to New Hampshire pay Vermont tax on those wages.

The median household income in Vermont is $60,000, which is $48,799 a year ($4,067 a month) after all taxes. That is close to the national median. After adjusting for cost of living, the purchasing power of that take-home is equivalent to $46,475 in an average-cost area.

Vermont ranks #30 of 50 for raw take-home pay and #41 for cost-adjusted purchasing power at $100,000. The 11-place gap between the two reflects an above-average cost of living that erodes what the take-home actually buys. The best state (Alaska) leaves $79,125; the worst (Oregon) leaves $70,932. Vermont is $4,218 behind the leader.

Vermont Tax Questions, Answered

Compare Vermont with Other Northeast States

Specific Salaries in Vermont