Overview of Vermont Taxes
Vermont has a progressive state income tax system with four brackets. The state’s top income tax rate of 8.75% is one of the highest in the nation. No Vermont cities have local income taxes.
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- Our Tax Expert
Jennifer Mansfield, CPA Tax
Jennifer Mansfield, CPA, JD/LLM-Tax, is a Certified Public Accountant with more than 30 years of experience providing tax advice. SmartAsset’s tax expert has a degree in Accounting and Business/Management from the University of Wyoming, as well as both a Masters in Tax Laws and a Juris Doctorate from Georgetown University Law Center. Jennifer has mostly worked in public accounting firms, including Ernst & Young and Deloitte. She is passionate about helping provide people and businesses with valuable accounting and tax advice to allow them to prosper financially. Jennifer lives in Arizona and was recently named to the Greater Tucson Leadership Program.
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Vermont Paycheck Calculator
Vermont Paycheck Quick Facts
- Vermont income tax rate: 3.35% - 8.75%
- Median household income: $60,076 (U.S. Census Bureau)
- Number of cities with local income taxes: 0
How Your Vermont Paycheck Works
It can be a challenge to predict the size of your paycheck because money is deducted for FICA, federal and state income taxes, as well as other withholdings.
When you start a new job, you'll have to fill out a W-4 form. Your Vermont employer uses the information you provide on this form - with regard to your marital status and any additional dollar withholdings you take - to determine how much to deduct from your paychecks for federal and state taxes. You'll need to submit a new form during the year if you want to make changes regarding your status or dependents.
Because of President Trump's new tax plan from 2017, withholding calculations changed in early 2018. Your employer will continue using the withholdings on your current form, but it's a good idea to check if you are still happy with what you have currently designated.
Beyond this, the IRS made notable changes to the Form W-4 for 2020. The new version completely removes allowances, using a five-step process asking filers to fill out personal information, list dependents and indicate any additional income instead. All employees hired as of Jan. 1, 2020 are required to complete the new version. But if you were hired before 2020, you'll only need to complete the new version if you intend to switch jobs or adjust your withholdings.
A portion of your income will also go toward paying Social Security and Medicare taxes. Collectively these are known as FICA taxes, and may be referred to as such on your pay stub. For each of these taxes, a percentage of your income is withheld for the sake of sustaining these programs. Your employer will match these percentages, meaning that in the end you will have only been responsible for half of your FICA taxes. In the case of Social Security, you and your employer will each contribute 6.2% of your income for a total of 12.4%. And Medicare comprises a smaller percentage, at just 1.45% each (for a total of 2.9%). Any income you have above $200,000 is also subject to a 0.9% Medicare surtax. Your employer doesn’t match the surtax.
Paying 50% of your FICA taxes is standard, but self-employed workers have to pay these taxes in their entirety since they do not have a separate employer to match their contributions. The good news is that they’re able to deduct the employer portion of their contribution.
Other deductions that could dip into your take-home pay include contributions to retirement accounts and health savings plans sponsored by your employer. The good news is that although you'll be dipping into your paycheck now to build up your 401(k) and save for retirement, the money is taken out of your paycheck before taxes are applied. So by contributing to one of these tax-advantaged accounts, you are actually reducing your taxable income. That will help lower the amount you have to pay now in taxes.
Vermont Median Household Income
|Year||Median Household Income|
Vermont’s tax rates are among the highest in the country. There are four tax brackets that vary based on income level and filing status. The state’s top tax rate is 8.75%, but it only applies to single filers making more than $200,200 and joint filers making more than $243,750 in taxable income. If you are a single filer with $39,600 or below in taxable income annually, you'll pay the lowest state income tax rate in Vermont, at 3.35%.
Vermont has no cities that levy a local income tax. This means that whether you live in Burlington, Rutland or anywhere in between, you won’t have an additional local withholding.
If you're planning on relocating to Vermont or thinking about a move within the state and you're looking to purchase a home, our Vermont mortgage guide is a great place to start learning.
Income Tax Brackets
|Vermont Taxable Income||Rate|
|$0 - $39,600||3.35%|
|$39,600 - $96,000||6.60%|
|$96,000 - $200,200||7.60%|
|Married, Filing Jointly|
|Vermont Taxable Income||Rate|
|$0 - $66,150||3.35%|
|$66,150 - $159,950||6.60%|
|$159,950 - $243,750||7.60%|
|Married, Filing Separately|
|Vermont Taxable Income||Rate|
|$0 - $33,075||3.35%|
|$33,075 - $79,975||6.60%|
|$79,975 - $121,875||7.60%|
|Head of Household|
|Vermont Taxable Income||Rate|
|$0 - $53,100||3.35%|
|$53,100 - $137,050||6.60%|
|$137,050 - $221,950||7.60%|
A financial advisor in Vermont can help you understand how taxes fit into your overall financial goals. Financial advisors can also help with investing and financial plans, including retirement, homeownership, insurance and more, to make sure you are preparing for the future.
How You Can Affect Your Vermont Paycheck
You can’t escape your income taxes, but you can take steps to change how much of your income taxes you pay each paycheck. One of the simplest ways to do this is by adjusting your withholdings when you file your W-4. If you want even more control over your tax withholding, you can also specify a dollar amount for your employer to withhold. For example, if you want your employer to withhold an additional $20 from each paycheck, you can write $20 on the appropriate line of your W-4. While that might mean smaller paychecks now, this practice could save you money come tax time.
Besides manually switching up your withholdings, you can also impact your paycheck by lowering your overall taxable income. You can do this by contributing to pre-tax retirement accounts, like a 401(k), or to a Health Savings Account (HSA) or Flexible Spending Account (FSA). This means smaller paychecks, but because the contributions go in pre-tax, you wind up keeping more of your money.
Vermont Top Income Tax Rate
|Year||Top Income Tax Rate|
Most Paycheck Friendly Places
SmartAsset's interactive map highlights the most paycheck friendly counties across the country. Zoom between states and the national map to see data points for each region, or look specifically at one of the four factors driving our analysis: Semi-Monthly Paycheck, Purchasing Power, Unemployment Rate, and Income Growth.
Methodology Our study aims to find the most paycheck friendly places in the country. These are places in the country with favorable economic conditions where you get to keep more of the money you make. To find these places we considered four different factors: semi-monthly paycheck, purchasing power, unemployment rate and income growth.
First, we calculated the semi-monthly paycheck for a single individual with two personal allowances. We applied relevant deductions and exemptions before calculating income tax withholding. To better compare withholding across counties we assumed a $50,000 annual income. We then indexed the paycheck amount for each county to reflect the counties with the lowest withholding burden.
We then created a purchasing power index for each county. This reflects the counties with the highest ratio of household income to cost of living. We also created an unemployment rate index that shows the counties with the lowest unemployment. For income growth, we calculated the annual growth in median income over five years for each county and indexed the results.
Finally, we calculated the weighted average of the indices to yield an overall paycheck friendliness score. We used a one half weighting for semi-monthly paycheck and a one-sixth weighting for purchasing power, unemployment rate and income growth. We indexed the final number so higher values reflect the most paycheck friendly places.
Sources: SmartAsset, government websites, US Census Bureau 2017 5-Year American Community Survey, MIT Living Wage Study, Bureau of Labor Statistics