Common Mistakes People Make
Misconception: 'Progressive tax means I'll pay the top 8.75% on all my income in Vermont.' Reality: Vermont's progressive system starts at 3.35% for the first $44,700-$74,600 of income (depending on filing status), and most middle-income earners pay effective rates around 5%-6.5%, not 8.75%. The 8.75% rate only applies to income above $226,650 (single) or $377,750 (married). Someone earning $100,000 pays an effective rate around 5%-6.5% (~ $5,000-$6,500 annually).
Misconception: 'Vermont has low taxes because it's a small state.' Reality: Vermont's income tax starts at 3.35% (relatively high starting rate) and tops out at 8.75%, which is among the higher rates in the nation. A $100,000 earner pays an effective rate around 5%-6.5%, while the same earner in a flat-tax state like Pennsylvania would pay $3,070 (3.07% flat, though PA may have local EIT). Vermont's high starting rate means even lower earners pay more than in many other states, and high earners face the 8.75% top rate.
Misconception: 'The four brackets mean my tax is simple like flat-tax states.' Reality: While Vermont has only four brackets (simpler than states with many brackets), the brackets are progressive with rates ranging from 3.35% to 8.75%. Unlike flat-tax states where everyone pays the same percentage, Vermont's progressive system means higher earners pay significantly higher effective rates The high starting rate (3.35%) also means even lower earners pay more than in states with lower starting brackets or flat taxes.
Vermont Tax Brackets
How to read this: Only the income within each bracket is taxed at that rate. Your total tax is the sum across brackets.
| Income Range | Tax Rate |
|---|---|
| $0 - $49,400 | 3.35% |
| $49,400 - $119,700 | 6.60% |
| $119,700 - $249,700 | 7.60% |
| $249,700+ | 8.75% |
Brackets shown for single filers. Married filing jointly brackets may differ. Use the calculator above to see your specific situation.
Key Facts That Affect Your Take-Home Pay
- Vermont uses a progressive income tax system with four brackets, starting at 3.35% for the first $44,700 of income (single) or $74,600 (married) and escalating to a top rate of 8.75% for income above $226,650 (single) or $377,750 (married), making Vermont's bracket structure relatively simple but with high rates across all brackets.
- Vermont's progressive brackets have a relatively high starting rate (3.35%) compared to many other progressive states that start at 1%-3%, meaning even lower earners pay a higher percentage in Vermont. For a $100,000 earner, income is taxed across multiple brackets creating an effective rate around 5%-6.5%, not the top 8.75% rate.
- Vermont does not levy income taxes locally, ensuring no geographic variations in income tax. All Vermont residents have the same income tax structure—only the state progressive brackets apply.
One Thing to Know
Vermont's first bracket covers $44,700-$74,600 (unusually large), meaning most middle-income earners pay the same 3.35% rate on most of their income. However, the starting rate of 3.35% is higher than many progressive states, which means even lower earners pay more than they might expect.
Important Notes
These calculations are estimates based on current tax law. Your actual take-home pay varies based on:
- Pre-tax deductions (401(k), health insurance, HSA, etc.)
- Your W-4 withholding elections
- Additional income or deductions at tax time
- Individual circumstances and tax situations
Tax rates are subject to change. Federal and state tax laws may be updated annually. This is not tax advice. For personalized help, consult a tax professional familiar with Vermont tax laws.