Vermont has a four-bracket income tax: 3.35%, 6.6%, 7.6% and 8.75% (2025 single thresholds: $49,400, $119,700 and $249,700; 2026 thresholds are indexed higher). Vermont taxes Social Security for higher earners. Property taxes average 1.51% — among the highest nationally. Vermont has offered a remote worker grant of up to $10,000 (reimbursing relocation costs) to qualifying new residents; check current availability. Vermont's tax burden is among the highest in New England.
At a glance
Key Facts
State Income Tax
Four brackets: 3.35% (to $49,400), 6.6% ($49,401–$119,700), 7.6% ($119,701–$249,700), 8.75% (above $249,700); single filer, 2025 thresholds (indexed higher for 2026)
Social Security
Taxable for higher earners; exempt for income below approximately $50,000 single / $65,000 married under Vermont's approach
Property Tax
1.51% average effective rate — 4th highest in the US; education property tax is state-administered and highly variable by town
Sales Tax
6% state rate; meals 9%, alcohol 10%; some towns add a 1% local option tax; groceries exempt
Remote Worker Grant
Up to $10,000 (up to $5,000 a year for 2 years) reimbursing relocation costs for eligible new remote workers; check current availability
Estate Tax
Vermont has an active state estate tax on estates above a $5 million exemption, at a flat 16% rate; 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 2025
Taxable Income (Single)
Rate
$0 – $49,400
3.35%
$49,401 – $119,700
6.6%
$119,701 – $249,700
7.6%
Above $249,700
8.75%
Married filing jointly brackets are roughly double. Vermont indexes brackets to inflation annually and has its own standard deduction ($7,650 single in 2025) and $5,300 personal exemption.
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 a minority of states that taxes Social Security.
Vermont Remote Worker Grant
Vermont's New Remote Worker Grant Program (created in 2018) has reimbursed qualifying relocation costs of new Vermont residents who work full time remotely for an out-of-state employer, at up to $5,000 per year for up to 2 years (up to $10,000 total). Eligibility rules and funding have changed over the years, so confirm that the program is currently open before relying on it. Vermont's high income and property taxes can 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 1.51% average effective property tax rate is the fourth-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 'homestead' education tax rate rather than the higher 'nonhomestead' rate. This is a critical filing requirement that many new Vermont residents miss.
Vermont Property Tax Rates
Illustrative estimates, not official town rates; actual bills vary by town, year and homestead status.
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 credit for lower and moderate-income homeowners (2025 household income of $115,400 or less): if education property taxes exceed a percentage of household income that depends on the town's per-pupil spending, a credit offsets the excess, up to $5,600 for the state education portion and $2,400 for the municipal portion. It is claimed on Form HS-122 and Schedule HI-144 with 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 (2025 single thresholds; 2026 indexed higher): 3.35% on the first $49,400, 6.6% on $49,401–$119,700, 7.6% on $119,701–$249,700, and 8.75% on income above $249,700. Married filing jointly brackets are roughly double. Vermont's 8.75% top rate is among the highest in New England, above Connecticut's 6.99% and below Massachusetts's effective top rate (9% with the 4% surtax on income above $1,107,750 in 2026).
Q
What is Vermont's remote worker grant program?
Vermont's New Remote Worker Grant Program has offered up to $5,000 per year for up to 2 years (up to $10,000) to reimburse relocation costs of new Vermont residents who work full time remotely for an out-of-state employer, among other requirements. Confirm with Vermont's Agency of Commerce and Community Development that the program is currently open. 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 1.51% average effective property tax rate (4th 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?
Yes — Vermont has an active state estate tax on estates above a $5 million exemption, charged at a flat 16% rate on the amount above that threshold. Vermont abolished a separate inheritance tax in the mid-2000s, but the estate tax itself remains in force. Federal estate tax also applies above the much higher federal exemption ($15 million per person in 2026). Vermont is not an exception in the Northeast — Maine ($7.16M threshold in 2026) and Rhode Island (about $1.8M threshold) also have state estate taxes, and Vermont's $5M exemption sits in the middle of that range.
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.