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.]
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Vermont income tax
Vermont has a graduated state individual income tax rate ranging from 3.35% to 8.75%, according to the Tax Foundation.
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 0.36% in additional sales taxes.
However, the average combined sales tax rate in Vermont is 6.36%, according to the Tax Foundation. Several types of products are exempt from sales tax.
- Groceries: Exempt
- Clothing: Exempt
- Prescription drugs: Exempt
How much are Vermont property taxes?
Vermont has an average effective property tax rate of 1.56%.
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 2024.
- 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 the previous calendar year.
- You must not have been claimed as a dependent on a 2023 tax return.
- Your household income must not have exceeded $128,000 in 2023.
Vermont gas tax
Gasoline: $0.12 per gallon
Diesel: $0.28 per gallon.
Vermont taxes on alcohol and tobacco
| Product | Tax Amount |
| Cigarettes | $3.08 per pack |
| Cigars | $20-$40 per 10 cigars |
| Tobacco/Snuff | $2.57 per ounce |
Source: Sales Tax Handbook
| Product | Tax Amount |
| Wine | $0.55 per gallon |
| Beer | $0.26 per gallon |
| Liquor | state-controlled |
Source: Sales Tax Handbook
Vermont estate and inheritance taxes
Vermont has an estate tax with an exemption of $5 million. The tax rate is a flat 16%.
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