Vermont uses a 4-bracket graduated income tax ranging from 3.35% to 8.75% for TY2026. Vermont conforms to the federal standard deduction ($15,700 single / $31,400 MFJ). Vermont taxes Social Security benefits above income thresholds - full exemption below $50,000 AGI (single) or $65,000 AGI (MFJ), phasing out at $75,000. Vermont has no local income taxes and exempts most grocery food from sales tax.
Income Tax
3.35%–8.75% (4 brackets)
Standard Deduction (Single)
$15,700
Social Security (Single)
Exempt below $50,000 AGI
Social Security (MFJ)
Exempt below $65,000 AGI
Vermont Income Tax Brackets 2026
Vermont's graduated income tax uses separate bracket thresholds for each filing status. The same four rates apply to all statuses, but the income levels at which higher rates kick in differ. All brackets confirmed for TY2026 by the Vermont Department of Taxes.
Vermont Taxable Income (Single)
Vermont Taxable Income (MFJ)
Rate
$0 – $45,400
$0 – $75,850
3.35%
$45,400 – $110,450
$75,850 – $184,400
6.60%
$110,450 – $229,550
$184,400 – $279,450
7.60%
$229,550+
$279,450+
8.75%
Vermont's 8.75% top rate is among the higher state income tax rates nationally. The bottom 3.35% bracket covers the first $45,400 of single income. Vermont capital gains are taxed as ordinary income at these same graduated rates.
Vermont Standard Deduction 2026
Vermont conforms to the federal standard deduction for TY2026. Vermont filers deduct $15,700 (single or MFS), $31,400 (MFJ), or $23,500 (head of household) before applying Vermont's graduated rates. Vermont has no personal exemption. Because Vermont follows the federal standard deduction, Vermont residents do not need to track a separate state deduction amount.
Vermont Social Security Taxation Rules
Vermont is one of the states that taxes Social Security benefits, but provides an exemption based on AGI:
Single filers: Full SS exemption if AGI is below $50,000. Exemption phases out between $50,000 and $75,000. Fully taxable above $75,000 AGI.
MFJ filers: Full SS exemption if AGI is below $65,000. Exemption phases out between $65,000 and $75,000. Fully taxable above $75,000 AGI.
Note that the phase-out ceiling ($75,000) is the same for both filing statuses - a married couple with AGI above $75,000 owes Vermont tax on their full Social Security benefit, just like a single filer above that threshold. These thresholds are verified for TY2026.
Vermont fully taxes most pension and retirement income other than Social Security. There is no general pension exclusion for Vermont income tax.
Vermont uses a 4-bracket graduated income tax for TY2026. For single filers: 3.35% on income up to $45,400; 6.60% on $45,400–$110,450; 7.60% on $110,450–$229,550; and 8.75% on income above $229,550. Vermont uses separate bracket thresholds for each filing status - MFJ filers reach the top 8.75% bracket at $279,450. All bracket thresholds are confirmed for TY2026 by the Vermont Department of Taxes.
Does Vermont tax Social Security benefits?
Vermont taxes Social Security benefits above certain AGI thresholds. Single filers with AGI below $50,000 receive a full exemption from Vermont income tax on Social Security income. MFJ filers with AGI below $65,000 receive a full exemption. The exemption phases out between those thresholds and $75,000 for both statuses - above $75,000 AGI, Social Security benefits are fully included in Vermont taxable income. These thresholds are verified for TY2026 by the Vermont Department of Taxes.
What is Vermont's standard deduction for 2026?
Vermont conforms to the federal standard deduction for TY2026. The Vermont standard deduction is $15,700 for single filers and $31,400 for married filing jointly. Vermont's conformity to the federal standard deduction means Vermont filers use the same base deduction amounts as they do on their federal return. These amounts are confirmed by the Vermont Department of Taxes for TY2026.
Does Vermont have local income taxes?
No. Vermont does not impose local or municipal income taxes. All Vermont residents pay the same graduated state income tax rates regardless of where in the state they live. Vermont does allow municipalities to impose a 1% local option sales tax, but this applies to retail sales, not income. Property taxes vary by town and school district and are administered separately.
What is Vermont's OBBBA conformity status for tips and overtime deductions?
Vermont's OBBBA conformity status for tips and overtime deductions is not yet confirmed. The Vermont Department of Taxes has not published guidance indicating whether Vermont will adopt the federal tip income deduction, overtime deduction, or senior bonus deduction under the One Big Beautiful Budget Act for TY2026. Vermont residents with tip or overtime income should monitor Vermont DOR guidance before assuming a state-level deduction applies. This page will be updated when official Vermont guidance is published.
How does Vermont's top income tax rate compare to other states?
Vermont's top income tax rate of 8.75% is among the higher state income tax rates in the country. Vermont's rate applies to single filers with income above $229,550 and MFJ filers with income above $279,450. Vermont's relatively high top rate reflects the state's funding of public services and education. The lowest bracket is 3.35% on the first $45,400 of income for single filers, providing a graduated structure where lower earners pay proportionally less.
Are groceries taxed in Vermont?
Most groceries are exempt from Vermont sales tax. Vermont exempts food and food ingredients for home consumption from its 6% state sales tax. However, prepared foods (foods sold in a heated state, or sold with utensils), candy, and soft drinks are taxable at the standard state rate. Vermont municipalities may add a 1% local option sales tax which generally follows the same food exemption treatment. Note: the sales tax exemption details are pending final verification for TY2026.
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