Vermont income tax rates and brackets for 2025 and 2026

Vermont’s four rates have not changed in the 2025 or 2026 sessions; the brackets are indexed for inflation each year (32 V.S.A. §5822). The 2026 brackets below are the Department of Taxes’ preliminary figures from its 2026 estimated-tax instructions. Married filing separately brackets are half the joint amounts.

If your federal adjusted gross income is over $150,000, your Vermont tax before credits is the greater of the rate-schedule tax or 3% of AGI (less interest from U.S. obligations). It mostly affects people with large deductions or excluded income, because the schedule tax on a similar amount of taxable income is usually higher.

Form IN-111 starts from federal adjusted gross income, applies Vermont additions and subtractions on Schedule IN-112, and then subtracts Vermont’s own standard deduction and personal exemptions. For 2025 the standard deduction is $7,650 single or married filing separately, $11,450 head of household and $15,300 joint, plus $1,250 for each person 65 or older or blind, and the personal exemption is $5,300. The 2026 amounts are not published yet.

Vermont excludes part of some capital gains: the first $5,000, or 40% of gain on certain assets held more than three years (not your home, depreciable property or publicly traded stocks and bonds), capped at 40% of federal taxable income or $350,000. Qualified dividends get no special treatment.

For example, a single filer with $60,000 of wages has $47,050 of Vermont taxable income for 2025 after the standard deduction and one exemption, all in the 3.35% bracket, and owes about $1,576.

Act 164 of 2026 updated Vermont to the federal tax code as of December 31, 2025, back to tax year 2025, while staying out of bonus depreciation and some business provisions; some filers with those items may need to amend their 2025 Vermont return. The federal deductions for tips, overtime, car loan interest and people 65 or older are taken after federal AGI, where Vermont starts, and Vermont has no subtraction for them, so as we read the rules they do not lower Vermont tax.

Vermont exempts all federally taxable Social Security if your AGI is $55,000 or less ($70,000 or less joint). The exemption phases out over the next $10,000 and ends at $65,000 ($80,000 joint). Act 71 of 2025 raised those limits by $5,000; the Department’s seniors page still shows the older figures.

Military retirement and survivor benefits are fully exempt with AGI up to $125,000, phasing out to nothing at $175,000, and can be combined with one other retirement exemption. Instead of the Social Security exemption, you can choose to exempt the first $10,000 of Civil Service Retirement System or certain other public pension income, under the same income limits. Other pensions, 401(k) and IRA withdrawals are taxed; Railroad Retirement is exempt.

Several Vermont credits are refundable and are claimed on Schedule IN-112 or separate forms.

You file if you must file a federal return and had more than $100 of Vermont income, or more than $1,000 of gross income as a nonresident. Everyone files Form IN-111 with Schedule IN-112 as needed; part-year residents and nonresidents add Schedule IN-113. You must e-file through commercial software, because myVTax does not accept the IN-111.

Returns are due April 15, so 2026 returns are due April 15, 2027. A federal extension also extends the Vermont return to October 15; file Form IN-151 only if you are paying with the extension. There is no extension for the Homestead Declaration or property tax credit.

Check a Vermont refund with “Check the Status of Your Return” on myVTax. It asks for your SSN or ITIN, last name, ZIP code and the exact refund from line 27 or 29 of Form IN-111. The Department says it generally processes e-filed returns in about 6 to 8 weeks and paper returns in about 8 to 12 weeks; fraud checks can push that past ten weeks, and returns filed before January 31 are held until W-2 reports arrive. The phone number is 802-828-2865.

The first time you ask for direct deposit, the Department still sends a paper check, and all paper-filed returns get a check.

You are a Vermont resident if Vermont is your domicile, or if you keep a permanent home in Vermont and are there more than 183 days of the year. Vermont figures tax for part-year residents and nonresidents on all income and then charges only the Vermont share, using Schedule IN-113.

We found no reciprocal agreement in Vermont’s guidance. New Hampshire residents who work in Vermont pay Vermont tax on their Vermont wages. New Hampshire does not tax wages, so a Vermont resident who works in New Hampshire has no other-state tax to credit and Vermont taxes all of it. Nonresidents temporarily living and working in Vermont owe Vermont tax on that pay, wherever the employer is.