Vermont Tax on Capital Gains

Vermont taxes capital gains through its state income tax system.

Capital gains are generally included in taxable income, which means profits from selling investments or property may be subject to Vermont income tax.

Does Vermont Have a Capital Gains Tax?

Yes. Vermont does not have a separate flat capital gains tax, but gains are typically taxed as part of your state taxable income.

This can apply to gains from selling:

• Stocks
• Mutual funds
• ETFs
• Real estate
• Land
• Business interests
• Collectibles

Federal taxes may also apply.

Short-Term vs Long-Term Capital Gains

Both short-term and long-term capital gains may be taxable in Vermont.

• Short-term capital gains; assets held one year or less
• Long-term capital gains; assets held more than one year

Unlike states with no income tax, Vermont may tax gains at regular income tax rates, although certain exclusions or adjustments may apply in some situations.

Example: You sell stock for a $20,000 profit while living in Vermont.
The gain may be included in Vermont taxable income and taxed based on your total income bracket.

Vermont Capital Gains Exclusion

Vermont has offered limited capital gains exclusions for certain long-term assets, subject to state rules, income limits, and annual caps. Eligibility depends on the type of asset sold and current tax law.

Because these rules can change, taxpayers with large gains should review current filing instructions before filing.

Vermont Income Tax Rates

Vermont is known for having graduated income tax rates. Your actual tax on capital gains depends on:

• Filing status
• Total taxable income
• Whether any exclusion applies
• Other deductions or credits

Higher-income taxpayers may pay more than lower-income taxpayers.

Capital Gains on Home Sales

If you sell your primary residence, federal home sale exclusions may reduce or eliminate taxable gain:

• Up to $250,000 gain excluded for single filers
• Up to $500,000 gain excluded for married filing jointly

If taxable gain remains on the federal return, Vermont may also tax that amount, subject to state rules.

Electronic Filing Recommendation 💻

• File federal and Vermont returns electronically
• Keep records of basis, improvements, and selling costs
• Review whether any Vermont capital gain exclusion applies
• Save brokerage and real estate closing documents

Summary

Vermont taxes capital gains through its income tax system. The amount owed depends on your income level, filing status, and whether you qualify for any state exclusions or adjustments.