Vermont State Income Tax

Vermont has four tax brackets that vary based on income and filing status. Tax rates are applied to taxable income, which is a measure of gross income after deductions and adjustments. The top Vermont State Income Tax rate is 8.75% for single filers earning more than $233,050 and married-filing-joint filers earning more than $289,988. Social Security benefits are exempt from Vermont income tax.

E-filing is available for all open tax years in Vermont, including the current year and two previous years. Returns can be transmitted as linked or unlinked federal returns or as state-only returns. There is no e-file mandate in Vermont, but preparers who choose to e-file must be accepted by the IRS and the state. A Vermont state return can also be filed as an amended return.

How to File Vermont State Income Tax?

You can file Vermont state income tax forms online at myVTax. You can also get an extension by submitting Form IN-151. The extension doesn’t extend the deadline for paying any taxes you owe, so be sure to pay on time to avoid penalties and interest.

How to Pay Vermont State Income Tax?

There are a few ways to pay your Vermont State Income Tax:

• Electronically through MyVTax: This is the most convenient option. You can access MyVTax, Vermont’s secure online portal, to submit payment via ACH debit from your bank account (free) or by credit card (with a 3% fee).
• By Mail: If you prefer not to pay electronically, you can mail a check or money order payable to “Vermont Department of Taxes” along with a completed Form IN-116 (voucher).
• Estimated Tax Payments: MyVTax also allows scheduling estimated tax payments via ACH debit or credit card (with a fee) for taxpayers who owe income tax throughout the year.

Other Vermont Taxes

Businesses must pay sales and excise taxes, along with business privilege taxes and a local occupational tax. The state’s top business tax rate is 6%. Local taxes may add an additional 1%. The Green Mountain State offers a variety of tax deductions and credits, including the low-income child and dependent care credit and the Vermont charitable giving tax credit. Moreover, it also provides a composite return option for LLCs and other pass-through entities. This allows members who don’t reside in the state to make estimated tax payments on behalf of the company.

Vermont sales tax is 6%, with local taxes adding up to an average combined rate of 6.359%. Some goods and services, including groceries, clothing, and prescription drugs, are exempt from Vermont State Income Tax. In the past, a business could only be required to register and collect sales tax in a state if it had physical presence in the state. However, in June 2018, the Supreme Court overruled this rule and states can now require sales tax collection from businesses with virtual connections to their state.