Last Updated: April 2026
Vermont is a high-tax state by any measure: its top income tax rate of 8.75% is among the highest in the nation, its property taxes average approximately 1.9%, and it taxes Social Security income for residents above modest income thresholds. Vermont does not have a sales tax on food, clothing, or medicine — a meaningful offset for lower-income residents — and its quality of public services, schools, and healthcare is generally rated highly. But for high earners, retirees with significant income, or remote workers choosing where to locate, Vermont's tax burden creates a meaningful incentive to consider New Hampshire or other lower-tax states. This guide covers what Vermont residents considering a move need to know.
Vermont's tax structure creates the highest burden for specific categories of residents:
Vermont's 8.75% top rate on income above ~$230,000 (single) is among the steepest in the Northeast. For a remote worker earning $250,000: Vermont income tax approximately $18,500–$19,500 vs New Hampshire income tax of $0 on wages. Annual savings by moving to New Hampshire: approximately $18,000–$19,000. Vermont has actively courted remote workers (Remote Worker Grant program) — somewhat at odds with its high income tax burden for higher earners.
Vermont is one of approximately 11 states that tax Social Security. The SS taxation threshold ($25,000 combined income for single filers) is very low — even modest Social Security recipients with any additional income face Vermont SS tax. For a retiree with $30,000 SS + $20,000 pension: approximately 85% of SS ($25,500) + $20,000 pension = $45,500 Vermont taxable income at the 6.6% rate = approximately $3,000 Vermont income tax. Moving to New Hampshire (no income tax on wages, investment income, or SS) saves this entire amount.
Vermont's ~1.9% effective property tax rate means a $500,000 home generates ~$9,500/year in property tax. Vermont's education property tax is levied statewide and redistributed to schools — meaning property tax in lower-income areas is subsidised by higher-value properties. Moving to New Hampshire (~1.89% effective rate) provides almost no property tax relief — NH has similarly high property taxes because it relies heavily on property tax rather than income tax. Florida (~0.91%) offers significant property tax savings vs Vermont.
Vermont uses standard domicile-based residency:
Vermont defines a resident as someone domiciled in Vermont, or a non-domiciliary who maintains a permanent place of abode in Vermont and is present more than 183 days. To exit Vermont residency: establish domicile in the new state (driver's license, voter registration, primary home), change vehicle registration, update estate documents. Vermont is not known for aggressive post-departure audits — lower income tax rate states typically have less audit motivation than high-rate states like California or New York.
Vermont's estate tax applies to Vermont-situated property (real estate, business interests in Vermont) regardless of the decedent's domicile at death. If you move out of Vermont but retain Vermont property worth more than $5,000,000, Vermont estate tax applies to that Vermont property in your estate. For most departing Vermonters with homes below the $5M threshold, this is not a concern — but Vermont farm owners, commercial property owners, and those with significant Vermont business interests should plan accordingly.
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Vermont Tax Help for US Expats →New Hampshire has no income tax on wages or retirement income — Social Security, pensions, IRA distributions, and 401(k) withdrawals are all exempt. Vermont taxes all of these (Social Security above low thresholds; pension and IRA income at regular rates). On income tax alone, New Hampshire is significantly better for retirees. However, New Hampshire's property taxes (~1.89% effective rate) are nearly as high as Vermont's (~1.9%). For a retiree with $60,000 combined retirement income and a $400,000 home: Vermont income tax ~$2,500–$3,500 + property tax ~$7,600 = ~$10,100–$11,100 total. New Hampshire income tax $0 + property tax ~$7,560 = ~$7,560 total. New Hampshire saves approximately $2,500–$3,500/year for this profile — meaningful but not dramatic. The bigger gains come from Florida (~0.91% property tax) which would reduce property tax by ~$4,000/year vs both states.
Vermont taxes capital gains as ordinary income at regular Vermont income tax rates (up to 8.75%). The federal principal residence exclusion ($250,000 gain exempt for single filers, $500,000 for married) applies — Vermont follows federal treatment and the excluded portion is not taxable in Vermont either. Capital gains above the federal exclusion are taxed in Vermont at the applicable bracket rate. For a Vermont homeowner selling a home with a gain of $600,000 (single filer): $250,000 excluded federally and for Vermont purposes; $350,000 taxable capital gain. Vermont income tax on $350,000 gain: approximately $26,500–$29,500 at the top bracket rate. This is a significant Vermont-specific cost for long-term homeowners selling appreciated property — particularly relevant given Vermont home value appreciation in recent years.
Vermont launched a Remote Worker Grant program in 2018 (one of the first such programs nationally) offering grants of up to $7,500 to remote workers who relocated to Vermont. The program has been periodically funded and renewed. The one-time grant of $7,500 compares unfavorably to the ongoing annual income tax cost for a remote worker earning $150,000: Vermont income tax approximately $10,500–$11,000/year vs New Hampshire $0. The grant pays back in less than one year of the income tax differential for a mid-to-high earner. Vermont's Remote Worker Grant is more meaningful as a signal about Vermont's economic development priorities than as a genuine financial offset to its income tax burden. Vermont officials have acknowledged the tension between the grant program and the state's high income tax rates in legislative discussions.