Vermont state tax: Overview
Vermont has four income tax brackets, and the state still taxes Social Security benefits for some filers. Property taxes are high when compared to most other states, and Vermont also has an estate tax. However, the sales tax rate in Vermont is about average, and many types of essential items are tax-exempt.
[Data for this state tax guide was gathered from a number of sources including the Census Bureau, the state’s government website, the Sales Tax Handbook, and the Tax Foundation. Property taxes are cited as a rate percentage rather than the assessed value.]
Vermont income taxes
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Below are income tax rates for tax year 2022. Vermont has not issued new tax rates for the 2023 tax year.
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Vermont Income Taxes: Single Filers
| $3,500 to $48,900 | 3.35% |
| $48,900 to $113,550 | 6.6% |
| $113,550 to $233,050 | 7.6% |
| More than $233,050 | 8.75% |
Vermont Income Taxes: Married filing separately
| $10,538 to $86,388 | 3.35% |
| $86,388 to $193,938 | 6.6% |
| $193,938 to $289,988 | 7.6% |
| More than $289,988 | 8.75% |
Vermont tax on retirement benefits: Social Security benefits are exempt for joint filers with an adjusted gross income (AGI) of $65,000 or less. Additionally, Vermont offers a deduction of up to $10,000 for some types of retirement income. However, income requirements apply. Railroad Retirement benefits are tax-exempt in Vermont.
Vermont sales tax
Vermont’s state sales tax rate is 6%. Localities can add up to 1% in additional sales taxes. However, the average combined sales tax rate in Vermont is 6.359%, according to the Tax Foundation. Several types of products are exempt from sales tax.
- Groceries are tax-exempt.
- Clothing is tax-exempt.
- Prescription drugs are tax-exempt.
- Vermont does not tax menstrual products.
- Diapers are tax-free in Vermont.
How much are Vermont property taxes?
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Property taxes are higher in Vermont than in most other states, with a median annual tax bill of $4,570 and an average effective property tax rate of 1.9%.
Vermont Property Tax Breaks for Retirees
Vermont offers a property tax credit of up to $8,000 to eligible homeowners. Homeowners must meet all of the following requirements to qualify for the credit in 2023.
- Your property must qualify as a homestead (as of April 1), and you must have filed a Homestead Declaration for the current year’s grand list.
- You must have been domiciled in Vermont for all of 2022.
- You must not have been claimed as a dependent on a 2022 tax return.
- Your household income must not have exceeded $134,800 in 2022.
Vermont gas taxes (motor fuel)
Gasoline: $0.316 per gallon
Diesel: $0.341 per gallon.
Vermont taxes on alcohol and tobacco
| Cigarettes | $3.08 per pack |
| Snuff | $2.57 per ounce |
| Cigars | $20 to $40 per 10 cigars |
| Vapor products | 92% of wholesale price |
| Beer | $0.26 per gallon |
| Wine | $0.55 per gallon |
| Liquor | State-Controlled (plus 10% on-premise sales tax) |
Vermont estate and inheritance taxes
Vermont has an estate tax with an exemption of $5 million. The tax rate is a flat 16%.