How Vermont income tax works
Vermont taxes individual income with 4 brackets ranging from 3.35% to 8.75%.
Your tax is calculated on taxable income — gross income minus the $7,000 standard deduction for a single filer.
Four brackets from 3.35% to 8.75%.
Vermont income tax rates for 2026
Only the income that falls inside each bracket is taxed at that bracket's rate — this is how marginal tax works, so your effective rate is always lower than your top bracket.
Your effective rate is the total tax divided by your gross income; your marginal rate is the rate on your next dollar earned. The calculator shows both.
Vermont allows a partial exclusion for certain long-term capital gains.
Lowering your Vermont tax bill
Pre-tax contributions to retirement accounts, health savings accounts and other deductions reduce the taxable income this calculator starts from.
Remember this estimate covers VT state income tax only. Federal income tax and payroll taxes apply on top, and this is a planning estimate — verify with the Vermont Department of Taxes (tax.vermont.gov) or a tax professional.
Frequently asked questions
How much is Vermont state income tax?
Vermont uses progressive brackets from 3.35% to 8.75%.
What is the difference between effective and marginal rate?
Your marginal rate is the rate on your last dollar of income; your effective rate is your total tax divided by total income, which is lower because of brackets and deductions.
Does this include federal tax?
No. This calculator estimates VT state income tax only. Federal income tax and payroll taxes are separate and apply on top.
How are capital gains taxed in Vermont?
Vermont allows a partial exclusion for certain long-term capital gains.