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Official Tax Guide

Vermont Taxes 2025: Income, Sales, and Property Tax Guide

Complete guide to Vermont state taxes. Income tax (3.35% - 8.75%), sales tax, and what you need to know before moving.

Updated January 15, 2026
5 min read

Vermont State Tax Guide 2025

Moving to Vermont offers a unique lifestyle, but understanding the state's tax structure is essential for financial planning. Vermont taxes are generally higher than the national average, but the state offers a high quality of life and robust public services.

This guide provides an overview of what new residents can expect regarding state and local taxes in 2025.

1. Income Tax

Vermont utilizes a progressive income tax system. This means that tax rates increase as your taxable income rises. Unlike a flat tax system where everyone pays the same percentage, Vermont’s structure is designed to scale with earnings.

2025 Tax Brackets (Estimated)

While official brackets are adjusted annually, the structure generally remains consistent. Based on current rates, here is the breakdown:

  • 3.35% on income up to $42,150 (Single) / $70,900 (Married Joint)
  • 6.6% on income between $42,151 – $102,200 (Single) / $70,901 – $170,350 (Married Joint)
  • 7.6% on income between $102,201 – $213,150 (Single) / $170,351 – $252,300 (Married Joint)
  • 8.75% on income over $213,150 (Single) / $252,300 (Married Joint)

Note: These figures are estimates based on historical data. Taxpayers should verify current year brackets with the Vermont Department of Taxes.

Deductions and Credits

Vermont offers standard deductions and personal exemptions, which are adjusted for inflation. Additionally, the state provides various tax credits, such as the Earned Income Tax Credit (EITC) and credits for property tax relief.

2. Sales Tax

The statewide sales tax rate in Vermont is 6%.

  • Local Taxes: Unlike some states where local jurisdictions heavily add to the sales tax, Vermont maintains a uniform state rate. However, specific local taxes may apply in certain resort areas or for specific services.
  • Exemptions: Essential items are generally exempt from sales tax, including:
    • Clothing and footwear (under $180 per item)
    • Groceries (food for home consumption)
    • Prescription medications

3. Property Tax

Property taxes in Vermont are primarily levied at the local level to fund schools and municipal services. These rates vary significantly by town and school district.

  • General Context: Vermont property taxes are typically higher than the national average. Homeowners should anticipate effective tax rates that can range from 1.5% to 2.0% of the assessed property value, though this varies widely depending on the municipality.
  • Homestead Declaration: Residents who occupy their property as their primary residence must file a Homestead Declaration annually to qualify for the education tax rate, which is generally lower than the non-residential rate.

4. Other Taxes

When budgeting for a move to Vermont, consider these additional tax categories:

  • Gas Tax: Vermont imposes a tax on gasoline and diesel fuel. As of 2025, the combined state and federal tax is approximately 30-35 cents per gallon (state portion fluctuates based on wholesale prices).
  • "Sin" Taxes: Vermont taxes specific goods at higher rates:
    • Alcohol: Moderate excise taxes apply to beer, wine, and spirits.
    • Tobacco/Nicotine: The state has some of the highest cigarette taxes in the nation (over $3.00 per pack), and taxes apply to vaping products.
  • Inheritance/Estate Tax: Vermont is one of the few states with an inheritance tax. However, it applies only to estates over $5 million (for deaths occurring in 2025). Spouses and direct descendants are generally exempt from paying the tax, though the estate may still need to file a return.

5. Retiree Taxes

Vermont is moderately retiree-friendly regarding income tax, but Social Security benefits are the primary focus.

  • Social Security Benefits: Vermont does not tax Social Security benefits for most taxpayers. However, high-income retirees may see a portion of their benefits taxed, depending on federal Adjusted Gross Income (AGI) thresholds.
  • Retirement Accounts: Withdrawals from 401(k)s, IRAs, and pensions are fully taxable at standard income tax rates.
  • Military Retirement: Vermont offers a partial exemption for military retirement pay, which is a significant benefit for veteran retirees.

6. Comparison to Neighbors

Vermont’s tax landscape differs notably from its immediate neighbors:

  • New Hampshire: NH has no state income tax on wages and no sales tax. However, it relies heavily on property taxes. Vermonters moving from NH will see an increase in income tax but potentially lower property taxes depending on the town.
  • New York: NY has a higher top marginal income tax rate (over 10%) and higher sales taxes (4% state + local). Vermont generally offers a lower income tax burden for high earners compared to NY.
  • Massachusetts: MA utilizes a flat income tax rate (5%) and a 6.25% sales tax. Vermont has a progressive income tax, which may benefit lower-income residents but penalize high earners compared to MA.

Disclaimer: Tax laws change frequently. The information provided in this guide is for educational purposes based on 2025 estimates. It is not a substitute for professional advice. Consult a CPA or tax professional regarding your specific financial situation.