Vermont State Tax Rate (2026 & 2027 Guide)

Vermont uses a graduated state income tax system with multiple brackets.

For the 2026 & 2027 tax years, rates range from 0% to 8.75%.

The key thing to understand is that only the income within each bracket is taxed at that rate, not your entire income.

Vermont State Income Tax Brackets

Single Filers and Married Filing Separately

• $0 to $3,825 → 0%
• $3,825 to $53,225 → 3.35%
• $53,225 to $123,525 → 6.60%
• $123,525 to $253,525 → 7.60%
• $253,525+ → 8.75%

Married Filing Jointly

• $0 to $11,475 → 0%
• $11,475 to $93,975 → 3.35%
• $93,975 to $210,925 → 6.60%
• $210,925 to $315,475 → 7.60%
• $315,475+ → 8.75%

Head of Household

• $0 to $3,825 → 0%
• $3,825 to $75,000 → 3.35%
• $75,000 to $165,700 → 6.60%
• $165,700 to $268,300 → 7.60%
• $268,300+ → 8.75%

How Vermont’s Tax System Works

Vermont’s system is progressive, meaning your income is taxed in layers as it increases. Even if you reach the top bracket, only the income above that threshold is taxed at the highest rate.

Example: If you earn $90,000 as a single filer, the first $3,825 is taxed at 0%, the next portion up to $53,225 is taxed at 3.35%, and the remaining income is taxed at 6.60%, keeping your overall tax rate lower than 6.60%.

Marginal vs Effective Tax Rate

Understanding this difference is important for tax planning.

• Marginal rate = the highest tax bracket your income reaches
• Effective rate = the average rate you actually pay

Example: A taxpayer in the 8.75% bracket will usually pay a lower overall rate because much of their income is taxed at 0%, 3.35%, 6.60%, and 7.60%.

What Income Is Taxed in Vermont

Vermont taxes most types of income, including:

• Wages and salaries
• Self-employment income
• Investment income
• Retirement income (with some deductions and exclusions available)

Vermont may tax some retirement income, but credits and deductions can reduce the impact depending on income level.

Are Vermont Taxes High?

Compared to other states:

• The top rate of 8.75% is relatively high
• Multiple brackets increase tax complexity
• Property taxes are also above average

For higher earners, Vermont is considered a higher-tax state overall.

Electronic Filing Recommendation 💻

• File electronically to reduce errors and processing delays
• Tax software automatically applies Vermont’s tax brackets
• Double-checks deductions and credits
• E-filing helps you receive refunds faster and ensures accuracy

Summary

Vermont’s state income tax system includes five brackets ranging from 0% to 8.75%. Because the system is progressive, most taxpayers pay a blended rate rather than the top rate on all income.

Understanding how each bracket works and applying available deductions can help reduce your total tax burden.