Vermont has a four-bracket income tax: 3.35% (up to $45,400 single), 6.6% ($45,401–$110,050), 7.6% ($110,051–$229,550), and 8.75% (above $229,550). Vermont taxes Social Security for higher earners. Property taxes average 1.74% — among the highest nationally. Vermont offers a unique $10,000 remote worker grant for qualifying new residents who relocate and work remotely. Vermont's tax burden is among the highest in New England.
At a glance
Key Facts
State Income Tax
Four brackets: 3.35% (to $45,400), 6.6% ($45,401–$110,050), 7.6% ($110,051–$229,550), 8.75% (above $229,550); single filer 2024
Social Security
Taxable for higher earners; exempt for income below approximately $50,000 single / $65,000 married under Vermont's approach
Property Tax
1.74% average effective rate — 3rd highest in the US; education property tax is state-administered and highly variable by town
Sales Tax
6% state rate; meals/alcohol 9%; no local additions (uniform statewide); groceries exempt
Remote Worker Grant
$10,000 grant (paid over 2 years) for eligible new Vermont residents who work remotely for out-of-state employers
Estate Tax
No Vermont estate tax since 2005; no inheritance tax
Introduction
Vermont has one of the higher income tax burdens in New England — with an 8.75% top rate and property taxes that rank among the nation's highest. Vermont's approach reflects a progressive policy tradition and a commitment to public education, healthcare, and environmental programs funded largely through income and property taxes.
Vermont's remote worker incentive program (up to $10,000) has attracted significant national attention, positioning Vermont as a destination for remote workers from high-cost urban centers. Despite high taxes, Vermont's quality of life, outdoor amenities, and low crime make it attractive to a specific demographic willing to pay for the Vermont lifestyle.
Section 01
Vermont Income Tax: Four Brackets, 8.75% Top Rate, and Social Security
Vermont's income tax is progressive with four brackets:
Vermont Income Tax Brackets 2024–2026
Taxable Income (Single)
Rate
$0 – $45,400
3.35%
$45,401 – $110,050
6.6%
$110,051 – $229,550
7.6%
Above $229,550
8.75%
Married filing jointly brackets are roughly double. Vermont indexes brackets to inflation annually and follows the federal standard deduction.
Vermont Social Security Taxation
Vermont taxes Social Security benefits for higher-income residents. Vermont has a deduction structure: residents with federal AGI below approximately $50,000 (single) or $65,000 (married) can fully exempt Social Security. Between those thresholds and $60,000/$75,000, partial exemption applies. Above those thresholds, Social Security is taxed following the federal approach. Vermont is one of approximately 12 states that taxes Social Security.
Vermont Remote Worker Grant
Vermont's New Arrivals program (ongoing from 2019, funded through 2026+) offers grants to qualifying new Vermont residents who: (1) move to Vermont and establish primary domicile; (2) work remotely for an employer or clients located outside Vermont; (3) are not currently Vermont residents. The grant pays $5,000 in year 1 and $5,000 in year 2 (total $10,000 over 2 years). Qualifying requires proof of relocation, remote employment outside Vermont, and tax filing. The program has attracted hundreds of remote workers per year — though Vermont's high income and property taxes often offset the grant value for higher earners who stay beyond 2 years.
Section 02
Vermont Property Tax: Education Tax and Vermont's Unique Structure
Vermont's 1.74% average effective property tax rate is the third-highest in the US. Vermont's property tax system is unusual nationally: much of the property tax is the 'education property tax' — a statewide levy administered by the state government (not local municipalities) to fund K-12 education through Act 60 (1997) and Act 68 (2003).
Vermont Property Tax Structure
Vermont residents pay three layers of property tax:
State education property tax: Varies by town based on 'equalized value' calculations; set by Vermont Legislature annually
Municipal property tax: Set by individual towns for local services
Special district taxes: Fire districts, water/sewer districts, etc.
The homestead declaration (filing Vermont Form HS-122 with Vermont income tax return) is required to receive the lower 'residential' education tax rate rather than the higher 'nonresidential' rate. This is a critical filing requirement that many new Vermont residents miss.
Vermont Property Tax Rates
Town
Effective Rate
Annual Tax on $400K Home
Burlington
~1.83%
~$7,320
Montpelier
~2.18%
~$8,720
Rutland
~2.41%
~$9,640
Stowe
~1.52%
~$6,080
Brattleboro
~2.25%
~$9,000
Vermont Property Tax Adjustment
Vermont provides a property tax adjustment (formerly 'circuit breaker') for lower and moderate-income homeowners: if property taxes exceed 5% of household income (under a certain income limit), Vermont refunds the excess. This is administered through the Vermont income tax return. For lower-income Vermont homeowners in high-tax towns, this adjustment can be very significant.
Vermont's education property tax, homestead declaration, Social Security threshold rules, and remote worker grant interact in complex ways. TaxHub connects you with licensed CPAs who understand Vermont's unique tax system.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Remote workers with foreign clients or income, or those with cross-border tax needs alongside Vermont residency — Greenback specialises in international and multi-jurisdiction tax situations.
⚠ Not the cheapest option — best for complex situations and expats who want a dedicated CPA.
Vermont has four income tax brackets: 3.35% on the first $45,400 (single), 6.6% on $45,401–$110,050, 7.6% on $110,051–$229,550, and 8.75% on income above $229,550. Married filing jointly brackets are roughly double. Vermont's 8.75% top rate is among the highest in New England, comparable to Connecticut's 6.99% and below Massachusetts's effective top rate (9% with Fair Share Amendment for income above $1M).
Q
What is Vermont's remote worker grant program?
Vermont's New Arrivals grant program offers up to $10,000 to new Vermont residents who work remotely for out-of-state employers. The grant pays $5,000 in year 1 and $5,000 in year 2. To qualify: you must be a new Vermont resident (not previously a Vermont resident), work remotely for an employer or clients located outside Vermont, and meet other program requirements. The grant must be applied for through Vermont's designated administrator. While $10,000 is meaningful, Vermont's high income tax (8.75% vs California's 13.3% but much higher than Florida's 0%) and property taxes offset this for many long-term residents.
Q
Why are Vermont property taxes so high?
Vermont's 1.74% average effective property tax rate (3rd highest nationally) reflects: (1) the state's 'education property tax' — a statewide levy administered to equalize per-pupil education spending across wealthy and poor towns; (2) Vermont's small and dispersed population, requiring high per-capita spending on roads, schools, and services; (3) many resort towns (Stowe, Killington) have high property values and full-time residential populations smaller than their tax base suggests, pushing rates up. Vermont's education funding formula (Act 60/68) is particularly controversial among higher-value towns that subsidize lower-income towns.
Q
Does Vermont have an estate tax?
No — Vermont eliminated its estate tax in 2005. Vermont has no state estate tax and no inheritance tax. Only the federal estate tax applies to Vermont residents ($13.61 million exemption in 2024). This is notable for the Northeast — Maine ($6.8M threshold) and Rhode Island ($1.77M threshold) both have state estate taxes, making Vermont an exception among New England states.
Disclaimer:This guide provides general tax information for educational purposes only. Vermont income tax brackets, property tax rates, and remote worker program details are subject to change. Always consult a qualified Vermont tax professional for advice specific to your situation.