Login
Vermont Taxes: What You Need to Know
In 2026, Vermont residents navigate a structured tax system that includes federal, state, and local tax withholdings. Here is an overview of the tax landscape:
Federal Tax Withholding
Vermont residents are subject to federal income tax withholding based on a progressive tax system. Federal tax rates range from 10% to 37% for 2026. The federal tax brackets for 2026 for single filers are as follows:
Source: IRS Revenue Procedure 2025-32: 2026 Federal Tax Rate Tables
Source: IRS IR-2025-103: 2026 Inflation Adjustments
- 10% on income up to $12,400
Source: IRS Revenue Procedure 2025-32
- 12% on income from $12,400 to $50,400
Source: IRS Revenue Procedure 2025-32
- 22% on income from $50,400 to $105,700
Source: IRS Revenue Procedure 2025-32
- 24% on income from $105,700 to $201,775
Source: IRS Revenue Procedure 2025-32
- 32% on income from $201,775 to $256,225
Source: IRS Revenue Procedure 2025-32
- 35% on income from $256,225 to $640,600
Source: IRS Revenue Procedure 2025-32
- 37% on income over $640,600
Source: IRS Revenue Procedure 2025-32
This structure is designed to ensure that higher earners contribute a larger share of their income in taxes.
State Income Tax Withholding
Vermont implements its own progressive state income tax system for 2026, with rates ranging from 3.35% to 8.75%. The 2026 Vermont Income Tax Withholding Instructions, Tables, and Charts (Publication GB-1210-2026) were released by the Vermont Department of Taxes on December 22, 2025, and are effective January 1, 2026 through December 31, 2026. Each year the brackets are inflation-adjusted; the withholding allowance per exemption for 2026 is $5,400 (up from $5,300 in 2025).
Source: Vermont Department of Taxes: GB-1210-2026 Income Tax Withholding Instructions, Tables, and Charts
Source: Vermont Department of Taxes: 2026 VT Rate Schedules
Source: Vermont Department of Taxes: 2026 VT Tax Tables
The acceptable exemption form is Form W-4VT, Vermont Employee’s Withholding Allowance Certificate. Employers may also use the federal Form W-4 if no W-4VT is submitted, though the Department strongly recommends that employees complete Form W-4VT.
Source: Vermont Department of Taxes: Withholding Instructions
1. Single or Head of Household Tax Withholding Table
| If the Amount of Taxable Income Is: | The Amount of Tax Withholding Should Be: |
|---|---|
| Over $0 but not over $3,825 | $0.00 |
| Over $3,825 but not over $53,225 | $0.00 plus 3.35% over $3,825 |
| Over $53,225 but not over $123,525 | $1,654.90 plus 6.60% of excess over $53,225 |
| Over $123,525 but not over $253,525 | $6,294.70 plus 7.60% of excess over $123,525 |
| Over $253,525 | $16,174.70 plus 8.75% of excess over $253,525 |
Source: Vermont Department of Taxes: GB-1210-2026 / NFC Bulletin NFC-25-1747149447 (2025 tables, same rates)
Source: Vermont Department of Taxes: 2026 Income Tax Withholding Instructions (GB-1210-2026)
2. Married Tax Withholding Table
| If the Amount of Taxable Income Is: | The Amount of Tax Withholding Should Be: |
|---|---|
| Over $0 but not over $11,475 | $0.00 |
| Over $11,475 but not over $93,975 | $0.00 plus 3.35% over $11,475 |
| Over $93,975 but not over $210,925 | $2,763.75 plus 6.60% of excess over $93,975 |
| Over $210,925 but not over $315,475 | $10,482.45 plus 7.60% of excess over $210,925 |
| Over $315,475 | $18,428.25 plus 8.75% of excess over $315,475 |
Source: Vermont Department of Taxes: GB-1210-2026 / NFC Bulletin NFC-25-1747149447 (2025 tables, same rates)
Source: Vermont Department of Taxes: 2026 Income Tax Withholding Instructions (GB-1210-2026)
These rates provide a fair distribution of the tax burden across different income levels, allowing the state to fund essential services and infrastructure.
Source: Vermont Department of Taxes: Tax Rates and Charts
Local Taxes
A notable advantage for Vermont residents is the absence of local income taxes. This simplifies the overall tax burden as residents only need to focus on federal and state taxes without additional local income tax obligations.
Source: Vermont Department of Taxes: Withholding Instructions
Sales Tax
The Vermont state sales tax rate is 6%. Local option taxes may apply in some jurisdictions, which can bring the combined rate above the statewide base.
Source: Vermont Department of Taxes: Tax Rates and Charts
| Tax Type | Details |
|---|---|
| Federal Income Tax | Progressive rates: 10% to 37% |
| State Income Tax | Progressive rates: 3.35% to 8.75% |
Source: Vermont Department of Taxes: Tax Rates and Charts
Source: IRS Revenue Procedure 2025-32: 2026 Federal Tax Rate Tables
In 2026, Vermont residents continue to contribute to federal programs through FICA taxes, which include Social Security and Medicare. These contributions are mandatory and structured as follows:
FICA Tax Contributions in Vermont
| Tax Type | Rate | Income Limit |
|---|---|---|
| Social Security | 6.2% | Up to $184,500 |
| Medicare | 1.45% | All wages; additional 0.9% for income over $200,000 |
Source: SSA: Maximum Taxable Earnings for Social Security 2026
Source: IRS Topic 751: Social Security and Medicare Withholding Rates
1. Social Security
The Social Security tax rate for 2026 remains at 6.2% on wages up to $184,500, up from $168,600 in 2024. This means income earned up to this limit is subject to this tax rate, helping fund the Social Security program. After reaching the income limit, no further Social Security taxes are withheld for the remainder of the year.
Source: SSA: Maximum Taxable Earnings for Social Security 2026
Source: SSA 2026 COLA Fact Sheet
2. Medicare
The Medicare tax is assessed at a rate of 1.45% on all wages. Additionally, there is an extra 0.9% Medicare tax for high-income earners on wages exceeding $200,000 for individuals and $250,000 for married couples filing jointly.
Source: IRS Topic 751: Social Security and Medicare Withholding Rates
Employer Contributions
Employers are required to match these contributions, paying 6.2% for Social Security and 1.45% for Medicare on behalf of their employees.
Source: IRS Topic 751: Social Security and Medicare Withholding Rates
Vermont Child Care Contribution
A significant 2026 addition for Vermont employers is the Child Care Contribution (CCC), which began July 1, 2024 under Act 76 of 2023. Employers are required to pay a 0.44% payroll tax on all employee wages earned in Vermont. Employers may choose to deduct and withhold a maximum of 25% of that contribution (i.e., 0.11%) from employee wages. Self-employed individuals pay 0.11% on self-employment income. This tax continues in full for 2026.
Source: Vermont Department of Taxes: Child Care Contribution
Source: Vermont Department of Taxes: June 2024 Child Care Contribution Press Release
Pre-Tax Deductions in Vermont
| Deduction Type | Contribution Limits | Description |
|---|---|---|
| Health Insurance Premiums | Varies based on employer plan | Contributions for medical, dental, and vision insurance can be deducted pre-tax, reducing taxable income. |
| 401(k) Contributions | Up to $24,500; $8,000 catch-up for ages 50-59 and 64+; $11,250 for ages 60-63 | Pre-tax 401(k) contributions reduce taxable income while building retirement savings. |
| Health Savings Accounts (HSAs) | $4,400 for self-only; $8,750 for families | HSAs allow pre-tax contributions for qualified medical expenses. Funds roll over year to year. |
| Flexible Spending Accounts (FSAs) | $3,400 for medical expenses; carryover up to $680 | FSAs allow pre-tax dollars for out-of-pocket medical expenses. Unused funds may be forfeited unless carryover applies. |
Source: IRS IR-2025-111: 401(k) Limit Increases to $24,500 for 2026
Source: IRS IRB 2025-21: HSA Contribution Limits 2026
Source: IRS IR-2025-103: FSA Limit 2026 ($3,400)
Benefits of Pre-Tax Deductions
- Lower Taxable Income: Reducing income subject to taxation can lower the overall tax amount owed.
- Enhanced Financial Wellness: Pre-tax deductions encourage saving for health-related expenses and retirement.
2026 Vermont Tax Table Example
| Tax Type | Rate/Percentage |
|---|---|
| Vermont State Income Tax | 3.35% to 8.75% (progressive) |
| FICA: Social Security | 6.2% (up to $184,500 in wages) |
| FICA: Medicare | 1.45% (additional 0.9% for high earners over $200,000) |
| Federal Income Tax | Progressive, based on federal tax brackets (10% to 37%) |
| Vermont Child Care Contribution | 0.44% employer payroll tax; up to 0.11% may be withheld from employee |
| State Sales Tax | 6% state base rate |
Source: Vermont Department of Taxes: Tax Rates and Charts
Source: SSA: Maximum Taxable Earnings for Social Security 2026
Source: Vermont Department of Taxes: Child Care Contribution
Median Household Income in Vermont
The median household income in Vermont was approximately $82,700 in 2024 (inflation-adjusted 2024 dollars), according to U.S. Census Bureau data. This figure reflects the state’s economic landscape, including contributions from healthcare, education, and tourism.
Source: U.S. Census Bureau / FRED: Median Household Income in Vermont
| Year | Median Household Income |
|---|---|
| 2022 | $73,911 |
| 2023 | $81,211 |
| 2024 | $82,700 |
Source: U.S. Census Bureau / FRED: Median Household Income in Vermont
Vermont Tax Brackets 2026
Vermont employs a progressive tax system to ensure that higher earners contribute a larger share of their income. The tax rates for 2026 range from 3.35% to 8.75%, unchanged from 2025. Brackets are inflation-adjusted annually. For full and up-to-date 2026 bracket thresholds, refer to the official Vermont 2026 Rate Schedules and 2026 Tax Tables.
Source: Vermont Department of Taxes: 2026 VT Rate Schedules
Source: Vermont Department of Taxes: 2026 VT Tax Tables
Source: Vermont Department of Taxes: GB-1210-2026 Withholding Instructions
Single or Head of Household Tax Withholding Table
| If the Amount of Taxable Income Is: | The Amount of Tax Withholding Should Be: |
|---|---|
| Over $0 but not over $3,925 | $0.00 |
| Over $3,925 but not over $54,675 | $0.00 plus 3.35% over $3,925 |
| Over $54,675 but not over $126,775 | $1,700.13 plus 6.60% of excess over $54,675 |
| Over $126,775 but not over $260,225 | $6,458.73 plus 7.60% of excess over $126,775 |
| Over $260,225 | $16,600.93 plus 8.75% of excess over $260,225 |
Source: Vermont Department of Taxes: GB-1210-2026 Withholding Instructions
For married couples filing jointly, the tax brackets are wider, allowing for higher income thresholds at each rate:
Vermont Tax Brackets 2026 for Married Couples Filing Jointly
| If the Amount of Taxable Income Is: | The Amount of Tax Withholding Should Be: |
|---|---|
| Over $0 but not over $11,775 | $0.00 |
| Over $11,775 but not over $96,475 | $0.00 plus 3.35% over $11,775 |
| Over $96,475 but not over $216,525 | $2,837.45 plus 6.60% of excess over $96,475 |
| Over $216,525 but not over $323,825 | $10,760.75 plus 7.60% of excess over $216,525 |
| Over $323,825 | $18,915.55 plus 8.75% of excess over $323,825 |
Source: Vermont Department of Taxes: GB-1210-2026 Withholding Instructions
Source: NFC Bulletin NFC-25-1747149447: Vermont State Income Tax Withholding
Explanation of the Tax Structure
- Progressive Tax System: Vermont’s tax structure ensures that those with higher incomes pay a larger percentage of their income in taxes.
- Higher Thresholds for Joint Filers: Income levels for married couples filing jointly are higher than for single filers, reflecting the potential for combined household income.
- State Revenue: These tax rates fund public services such as education, healthcare, and infrastructure in Vermont.
- Vermont UI Taxable Wage Base 2026: $15,400 per employee per year, up from $14,800 in 2025. New employer rate is 1% (effective July 1, 2025).
Source: Vermont Department of Labor: 2026 UI Taxable Wage Base
