Question 1

What is Vermont's state income tax rate for 2025?

Accepted Answer

Vermont taxes personal income under a 4-bracket progressive structure for tax year 2025: 3.35%, 6.60%, 7.60%, and a top marginal rate of 8.75% at single-filer thresholds of $53,225 / $123,525 / $253,525, imposed by 32 V.S.A. §5822. The brackets are inflation-indexed annually per 32 V.S.A. §5829 based on the CPI-U. Vermont applies separate schedules to head-of-household and married-filing-jointly filers, with MFJ thresholds set higher (but not exactly double) than single.

Question 2

What is Vermont's standard deduction for 2025?

Accepted Answer

Vermont's standard deduction for tax year 2025 is $7,400 for single and married-filing-separately filers, $11,100 for head-of-household, and $14,850 for married-filing-jointly, under 32 V.S.A. §5811(21)(C). Vermont also allows a personal exemption of $5,100 per taxpayer and dependent under §5811(21)(D). Both the standard deduction and personal exemptions are inflation-indexed annually.

Question 3

Does Vermont tax Social Security and retirement income?

Accepted Answer

Vermont provides a full Social Security exemption for filers with federal AGI at or below $50,000 single / $65,000 MFJ, with a phased partial exemption between $50,000-$60,000 single / $65,000-$75,000 MFJ, under 32 V.S.A. §5811(21)(B)(iv). Vermont also fully exempts military retirement pay, CSRS benefits received in lieu of Social Security, and up to $10,000 of other retirement income (traditional IRA, 401(k), private pension) subject to the same AGI thresholds under §5830e.

Question 4

Do Vermont municipalities charge a local income tax?

Accepted Answer

No. Vermont municipalities do not levy a local income tax. Local revenue in Vermont comes primarily from the education property tax (a statewide property-tax pool administered under Vermont's Act 60 / Act 68 school-funding equalization framework at 16 V.S.A. §4025) and municipal property taxes. Vermont's 6.0% state sales tax combined with local option sales taxes averaging 0.36% produces a combined average state-plus-local rate of approximately 6.36% under 32 V.S.A. §9771.

Question 5

What is Vermont's Land Gains Tax?

Accepted Answer

Vermont's Land Gains Tax, imposed by 32 V.S.A. Chapter 236 (§10001 et seq.), is a separate transfer-time surtax on gains from the sale of Vermont land held for less than six years. Rates are graduated from 5% to 80% depending on both the holding period and the gain-to-basis ratio, with the highest rates applying to short-held, high-appreciation parcels. The tax was enacted in 1973 to discourage speculative subdivision of Vermont farmland and forest and has been credited as a model anti-speculation land tax; the six-year holding-period floor was set to align with a full development-and-sale cycle. Primary residences of at least ten acres and certain agricultural transfers are exempt.

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