Vermont Income Tax Calculator

Overview of Vermont Taxes: Vermont has a progressive state income tax with a top marginal rate that ranks as one of the highest in the country. The state also charges a 6% sales tax, with some cities levying an additional 1%. Vermont’s property tax rates also rank among the highest in the U.S.

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Taxes in Vermont

Vermont State Tax Quick Facts

• Income tax: 0% – 8.75%
• Sales tax: 6% – 7%
• Property tax: 1.42% median effective rate
• Gas tax: 31.39 cents per gallon of regular gasoline

Vermont’s tax system consists of a state personal income tax, estate tax, state sales tax, local property tax, local sales taxes and a number of additional excise taxes on products like gasoline and cigarettes. For the 2025 tax year, the income tax in Vermont has a top rate of 8.75%, which places it as one of the highest rates in the U.S. Meanwhile, total state and local sales taxes range from 6% to 7%.

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Vermont Income Taxes

Vermont has five tax brackets for the 2025 tax year. Rates range from 0% to 8.75%. The table below shows rates and brackets for the four main filing statuses in Vermont.

Income Tax Brackets

The rates above do not apply to your total income, but rather to taxable income. Taxable income incorporates adjustments, deductions and exemptions so it is almost always lower than your total income.

To calculate taxable income in Vermont, begin with your federal taxable income from Form 1040 and then apply Vermont-specific adjustments. You must include any interest from non-Vermont state and local obligations, such as municipal bonds issued by other states. Vermont also requires certain federal deductions, like the deduction for state and local income taxes, to be added back when they are not allowed at the state level. You may subtract interest from U.S. government obligations, as well as any eligible Vermont capital gains exclusions, to arrive at your Vermont taxable income.

Vermont Tax Credits

After calculating your income tax liability, you may be able to claim some credits to reduce your tax bill or increase your refund. Credits available to individuals in Vermont include the Child and Dependent Care Credit, the Elderly or Permanently Totally Disabled Tax Credit and the Earned Income Tax Credit (EITC). These are all based on federal credits. The Child and Dependent Care Credit is equal to 72% of the federal credit, while the Elderly or Permanently Totally Disabled Tax Credit is worth up 24% of its federal counterpart. The EITC is equal to 38% of the same federal credit.

Vermont Capital Gains Tax

Most capital gains in Vermont are subject to the personal income tax rates of 3.35% – 8.75%. This includes all short-term gains, but long term-gains may be eligible for an exclusion. Since 2014, taxpayers have been able to claim an exclusion of up to $5,000 on their federal net adjusted capital gains.

Certain types of long-term gains may be eligible for an alternate exclusion equal to 40% of the net adjusted capital gain on assets held at least three years. This exclusion cannot be claimed on residential real estate used as a taxpayer’s primary or non-primary home, depreciable personal property (except farm property or standing timber) or any publicly traded financial instruments (including stocks and bonds). Income from capital gains on other types of property (like commercial real estate) is eligible for this 40% exclusion after three years.

Vermont Sales Tax

The base sales tax in Vermont is 6%. This applies to goods and some services in Vermont. Certain types of items are specifically exempted. In addition to that 6% state rate, a number of cities in Vermont collect their own 1% local option sales tax.

The table below shows the total sales tax rates for the Vermont counties that collect the extra tax.

Sales Tax Rates (Updated December 2025)

The most important exemptions to these rates are for food (as long as it is intended for off-site consumption), prescription and over-the-counter drugs, medical equipment (such as wheelchairs or oxygen equipment) and newspapers. Purchases of clothing are also untaxed, as Vermont is one of a handful of states to exempt clothing items from sales tax. Motor vehicles are subject to a 6% tax levied by the Vermont Department of Motor Vehicles and are therefore exempt from the local option rates above.

Some products are subject to rates higher than those listed above. The state tax on hotels, motels and restaurant meals (the “Meals and Rooms Tax”) is 9%, plus an additional 1% local option meals and rooms tax collected by some cities. Alcohol is also subject to a higher sales tax of 10%.

Vermont Property Tax

Vermont’s property tax rates rank among the highest in the U.S. The median Vermont homeowner pays more than $5,026 per year in property taxes, which leads to a 1.42% effective rate (median property tax bill divided by median home value). That is the sixth-highest effective property tax rate in the country. Note that property is assessed and tax rates are set at the municipal level in Vermont, so rates can vary from one city or town to the next.

Considering buying a house in the Green Mountain state, or looking to refinance a property you already own? Take a look at our Vermont mortgage guide for details on rates and information about getting a mortgage in the state.

Vermont Gas Tax

While gasoline purchases in Vermont are not subject to sales tax, there is an excise tax on fuel in Vermont. The state tax on regular gasoline totals 31.39 cents per gallon.

Vermont Alcohol Tax

Taxes on alcoholic beverages in Vermont vary depending on the type of beverage. Vermont is a control state, which means that it controls the wholesale of liquor, which is sold through agency stores. The state therefore captures revenue by selling liquor, which functions as a de facto tax. It also taxes the agency stores based on their total revenue, with rates ranging from 5% to 25%. The Tax Foundation has estimated that these taxes, along with the revenue earned through the state liquor control system, are equivalent to an excise tax of $9.06 per gallon of liquor. 

Beer and wine (which are not part of the control system) face two types of taxes in Vermont. The first is an alcohol sales tax of 10% (plus a 1% local option tax in some cities). The second is an excise tax, which is 27 cents per gallon of beer and 55 cents per gallon of wine.

Vermont Estate Tax

The Vermont estate tax applies to gross estates with a value of $5 million or more. If the total value of the decedent’s in-state and out-of-state assets exceeds that amount, a state estate tax return is required. Taxes may not be required if the property is being left to a surviving spouse. Any estates worth more than the $5 million cut-off are taxed at a rate of 16%.

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