Vermont state income tax
Vermont has a state income tax. It is graduated, with a top marginal rate of 8.75%. Four brackets, same rate structure and order for tax years 2025 and 2026 (only the dollar thresholds are inflation-indexed between the two years). Officially published Tax Year 2025 Vermont Tax Rate Schedules (in effect for the return filers are completing during the current 2026 filing season), Single (Schedule X): 3.35% up to $49,400; 6.60% (base $1,655) from $49,400-$119,700; 7.60% (base $6,295) from $119,700-$249,700; 8.75% (base $16,175) above $249,700. Married Filing Jointly (Schedule Y-1): 3.35% up to $75,000; 6.60% (base $2,513, applies $75,000-$82,500, then base $2,764) $82,500-$199,450; 7.60% (base $10,482) $199,450-$304,000; 8.75% (base $18,428) above $304,000. Head of Household (Schedule Z): 3.35% to $66,200; 6.60% (base $2,218/$2,799) $66,200-$171,000; 7.60% (base $9,135) $171,000-$276,850; 8.75% (base $17,179) above $276,850. Married Filing Separately (Schedule Y-2): 3.35% to $41,250; 6.60% (base $1,382/$3,609) $41,250-$99,725; 7.60% (base $5,241) $99,725-$152,000; 8.75% (base $9,214) above $152,000. For AGI over $150,000, tax is the GREATER of the schedule calculation above or 3% of AGI (less interest from U.S. obligations), an alternative minimum-style floor. Tax year 2026 (wages paid/income earned in 2026) uses the identical four rates (3.35/6.60/7.60/8.75%) in the identical order, confirmed via the Department's 2026 withholding Percentage Method Tables, effective Jan. 1, 2026, whose annual-payroll bracket breakpoints for a single filer claiming 0 allowances ($3,925 built-in standard-deduction band, then 3.35% to $54,675, 6.60% to $126,775 [base $1,700.13], 7.60% to $260,225 [base $6,458.73], 8.75% above [base $16,600.93]) net of that $3,925 standard-deduction offset reproduce the same base-tax dollars as the 2025 Schedule X once inflation-indexed. The Department had not published its finalized Tax Year 2026 rate schedules when this was checked, so the exact 2026 taxable-income breakpoints are left out here rather than estimated. 32 V.S.A. § 5822. Capital gains are taxed as ordinary income (no special lower rate).
Does Vermont have a state income tax?
Yes. Vermont taxes individual income on a graduated schedule topping out at 8.75%. Four brackets, same rate structure and order for tax years 2025 and 2026 (only the dollar thresholds are inflation-indexed between the two years). Officially published Tax Year 2025 Vermont Tax Rate Schedules (in effect for the return filers are completing during the current 2026 filing season), Single (Schedule X): 3.35% up to $49,400; 6.60% (base $1,655) from $49,400-$119,700; 7.60% (base $6,295) from $119,700-$249,700; 8.75% (base $16,175) above $249,700. Married Filing Jointly (Schedule Y-1): 3.35% up to $75,000; 6.60% (base $2,513, applies $75,000-$82,500, then base $2,764) $82,500-$199,450; 7.60% (base $10,482) $199,450-$304,000; 8.75% (base $18,428) above $304,000. Head of Household (Schedule Z): 3.35% to $66,200; 6.60% (base $2,218/$2,799) $66,200-$171,000; 7.60% (base $9,135) $171,000-$276,850; 8.75% (base $17,179) above $276,850. Married Filing Separately (Schedule Y-2): 3.35% to $41,250; 6.60% (base $1,382/$3,609) $41,250-$99,725; 7.60% (base $5,241) $99,725-$152,000; 8.75% (base $9,214) above $152,000. For AGI over $150,000, tax is the GREATER of the schedule calculation above or 3% of AGI (less interest from U.S. obligations), an alternative minimum-style floor. Tax year 2026 (wages paid/income earned in 2026) uses the identical four rates (3.35/6.60/7.60/8.75%) in the identical order, confirmed via the Department's 2026 withholding Percentage Method Tables, effective Jan. 1, 2026, whose annual-payroll bracket breakpoints for a single filer claiming 0 allowances ($3,925 built-in standard-deduction band, then 3.35% to $54,675, 6.60% to $126,775 [base $1,700.13], 7.60% to $260,225 [base $6,458.73], 8.75% above [base $16,600.93]) net of that $3,925 standard-deduction offset reproduce the same base-tax dollars as the 2025 Schedule X once inflation-indexed. The Department had not published its finalized Tax Year 2026 rate schedules when this was checked, so the exact 2026 taxable-income breakpoints are left out here rather than estimated. 32 V.S.A. § 5822.
| Item | Vermont |
|---|---|
| State income tax | Yes, graduated |
| Top marginal rate | 8.75% |
| Capital gains | Taxed as ordinary income, up to 8.75% |
| State sales tax | 6% (plus local) |
| Avg. property tax rate | 1.71% of home value |
| Estate / inheritance tax | Estate tax (exemption $5,000,000) |
How does Vermont tax capital gains?
Vermont has no separate, lower rate for capital gains. They are taxed as ordinary income at the same rates as your wages, up to 8.75%, on top of federal capital gains tax. See how capital gains tax works in 2026.
Property tax in Vermont
Vermont's average effective property-tax rate is about 1.71% of a home's value, but it varies widely by county. See Vermont property tax by county for the effective rate and median bill in every county.
What about retirement income in Vermont?
Retirement income is taxed differently from wages in many states. For how Vermont treats Social Security, pensions, and 401(k)/IRA withdrawals, see Vermont retirement taxes.
Sources
- Vermont income tax rates and brackets: Vermont Department of Revenue / Taxation.
- Vermont capital gains treatment: Vermont tax authority.
- Vermont sales tax: Vermont Department of Revenue.