Vermont Income
Tax Rates & Rules

Vermont uses a progressive individual income tax with four marginal rates: 3.35 percent, 6.60 percent, 7.60 percent and 8.75 percent. The bracket thresholds are adjusted for inflation each year, so a Vermont income tax calculator should use the current tax-year schedule rather than older bracket amounts. Vermont taxable income also depends on federal income information, state modifications, residency and source.

What Are the Vermont Income Tax Rates in 2026?

Vermont's individual income tax rates remain 3.35 percent, 6.60 percent, 7.60 percent and 8.75 percent in 2026.

Vermont law requires the taxable-income thresholds in the rate tables to be adjusted annually for inflation. As of August 25, 2026, the Department's publicly indexed individual return materials still center on the 2025 return year, so this page should not copy 2025 bracket thresholds and label them as 2026. The final 2026 bracket amounts should be updated from the Department's 2026 rate schedule when that schedule is published.

How Vermont Taxable Income Is Calculated

Vermont taxable income generally begins with federal adjusted gross income then applies Vermont-specific modifications, deductions, exemptions and the state's taxable-income rules.

• Start with federal adjusted gross income from the federal return.
• Apply Vermont additions and subtractions required by state law.
• Apply the Vermont standard deduction and personal exemptions allowed for the tax year.
• Determine Vermont taxable income.
• Apply the progressive Vermont rate schedule for the filing status.
• For nonresidents and some part-year residents, apply the Vermont income percentage using Schedule IN-113 principles.
• Apply eligible credits, withholding and estimated payments to determine the final amount due or refund.

Vermont is designed to coordinate with federal income tax concepts but it does not simply copy the federal result. State-specific modifications can change taxable income before Vermont's rate schedule is applied.

Vermont Standard Deduction Is Indexed for Inflation

Vermont provides a state standard deduction that is adjusted for inflation, so taxpayers should use the amount published for the applicable tax year rather than the unadjusted statutory base amount.

The statute establishes base standard deductions for single and married filing separately, head of household plus married filing jointly or surviving spouse. Those base amounts are adjusted under Vermont law. Taxpayers who qualify for additional federal standard deduction treatment can also have an additional Vermont deduction under the state rules.

Because the final 2026 personal income tax booklet is not yet posted as of August 25, 2026, the final inflation-adjusted 2026 standard deduction should be confirmed from the 2026 IN-111 instructions before filing.

Who Must File a Vermont Income Tax Return?

Vermont filing rules generally connect the state filing obligation to the federal return plus the amount and source of Vermont income.

Under 32 V.S.A. section 5861, an individual subject to Vermont personal income tax must file when the person is required to file a federal income tax return and has more than $100 of Vermont income, more than $1,000 of specified Vermont-source gross income or a Vermont tax liability.

The standard individual return is Form IN-111. Nonresidents and some part-year residents use Schedule IN-113 to determine the Vermont portion of income. The final 2026 forms should be used for return-line instructions and tax-year-specific deduction amounts.

Vermont Residents, Part-Year Residents and Nonresidents

Vermont residents are generally taxed on resident income while nonresidents are taxed on Vermont-source income and part-year residents combine the resident period with Vermont-source income from the nonresident period.

• Resident: Vermont income generally begins with the individual's adjusted gross income, subject to Vermont exclusions and modifications.
• Nonresident: Vermont income includes items such as Vermont rents, gains from Vermont property, wages for services performed in Vermont plus Vermont business income.
• Part-year resident: generally includes resident-period Vermont income plus Vermont-source income earned or received during the nonresident portion of the year.

Vermont residency generally includes a person domiciled in Vermont or a person who maintains a permanent place of abode in Vermont and is present in the state for more than 183 days during the tax year.

Does Vermont Tax Remote Workers?

Yes. Vermont can tax remote wages when the employee performs the services in Vermont, even when the employer is located in another state.

Vermont's source statute treats wages and other compensation for services performed within Vermont as Vermont income for a nonresident. Department guidance also states that employees who live and work remotely in Vermont have Vermont income for the period they work from a Vermont location.

A Vermont resident can also be subject to Vermont tax on income from outside the state, with a credit potentially available when the same income is taxed by another state or Canadian province. Hybrid workers should keep work-location records when income must be allocated.

Vermont Withholding Is a Prepayment, Not the Final Annual Tax

Vermont wage withholding helps prepay personal income tax but it does not determine the employee's final annual liability.

Vermont withholding generally applies to wages paid to a Vermont resident plus wages paid to a nonresident for services performed in Vermont. The Department encourages employees to complete Form W-4VT because federal withholding settings do not always produce an appropriate Vermont result.

Employees who need a pay-period estimate can use the Vermont paycheck calculator rather than applying the annual marginal rate directly to gross pay.

The Child Care Contribution Is Not Vermont Income Tax

Vermont's Child Care Contribution is a separate payroll contribution and should not be combined with the state's personal income tax rate.

The contribution is tied to covered wages and employers can choose to withhold part of the cost from employees. It can affect take-home pay, but it is not an additional individual income tax bracket and should not be included when calculating annual Vermont income tax liability.

Keep Annual Tax and Payroll Records Separate

An annual Vermont income tax estimate and a pay stub serve different purposes, so payroll documents should report the actual withholding processed in the real payroll run.

After payroll is finalized, the Vermont pay stub generator can organize genuine earnings and deductions into an itemized record. For a general lawful payroll workflow, a paystub maker should be used only with verified employment and payment information.

Tax Information and Responsible Use

This page explains state income tax concepts for general informational, payroll and lawful recordkeeping purposes.

Tax liability can vary by residency, filing status, income source, deductions, credits and tax year. Use final state forms and instructions when preparing an actual return. Online PayStub should be used only with genuine employment, earnings, withholding and payment information. Do not use generated payroll records to fabricate employment, inflate income or misrepresent payment history.