Vermont State Income Tax Rates and Brackets for 2025 Explained

Key Takeaways

• Vermont’s 2025 tax rates range from 3.35% to 8.75% on taxable income based on filing status.
• Residents, part-year residents, and nonresidents with Vermont income must file if income exceeds thresholds.
• Immigrants on visas or green cards follow same Vermont filing rules; ITIN accepted if no SSN.

Vermont’s state income tax system can seem complex, especially for newcomers, immigrants, and anyone unfamiliar with U.S. tax rules. Understanding who needs to file, what the state income tax rates and tax brackets are, and how to meet all requirements is essential for staying compliant and avoiding costly mistakes. This guide breaks down Vermont’s 2025 income tax requirements in simple terms, covering eligibility, documentation, the application process, and practical tips for immigrants and residents alike.

Who Must File Vermont State Income Tax

Most people living or working in Vermont must file a state income tax return if they meet certain income thresholds. This includes:

• Residents: Anyone who lives in Vermont for the entire year, or who considers Vermont their home, must file if their income is above the filing requirement.
• Part-Year Residents: If you moved into or out of Vermont during the year, You must file as a part-year resident if you had income while living in Vermont.
• Nonresidents: If you do not live in Vermont but earned income from Vermont sources (such as a job or rental property), you may need to file a Vermont return.

Example:
Maria moved from Canada 🇨🇦 to Vermont in July 2024. She worked in Vermont for the rest of the year. Maria must file as a part-year resident, reporting only the income she earned while living in Vermont.

Key Point:
If you are an immigrant on a work visa, a student visa, or a green card holder, you are generally treated as a resident for tax purposes if Vermont is your main home. If you are unsure, the Vermont Department of Taxes offers guidance and phone support.

Eligibility Criteria for Filing Vermont State Income Tax

To determine if you need to file, consider these main factors:

1. Residency Status

• Full-Year Resident: Lived in Vermont all year.
• Part-Year Resident: Lived in Vermont for part of the year.
• Nonresident: Lived outside Vermont but earned Vermont-source income.

2. Income Thresholds

You must file a Vermont return if your federal gross income (before deductions) is above the minimum required to file a federal return. For most people, this is the same as the federal filing requirement, but Vermont may require you to file even if you are not required to file federally, especially if you had Vermont income.

3. Source of Income

• Wages from Vermont employers
• Self-employment income earned in Vermont
• Rental income from Vermont property
• Other income from Vermont sources

4. Immigration Status

Immigrants with legal status (such as green card holders, work visa holders, and students) must follow the same rules as U.S. citizens if they meet the residency and income requirements. Undocumented immigrants may also have to file if they have Vermont-source income, though their situation can be more complicated.

Example:
A student from India on an F-1 visa who worked on campus in Vermont and earned more than the federal filing threshold must file a Vermont return.

Vermont State Income Tax Rates and Tax Brackets for 2025

Vermont uses a graduated income tax system. This means your income is divided into parts, and each part is taxed at a different rate. The more you earn, the higher the rate on the top portion of your income.

Here are the 2025 Vermont state income tax rates and brackets:

Key Points:

• These rates apply to taxable income, which is your federal taxable income adjusted for Vermont-specific rules.
• The tax is marginal. For example, if you are single and earn $60,000, you pay 3.35% on the first $47,900, and 6.6% on the next $12,100.
• Vermont’s top rate of 8.75% is among the highest in the United States 🇺🇸, but only applies to high earners.

Example Calculation:
If you are a single filer with $60,000 in taxable income:
– First $47,900 taxed at 3.35% = $1,604.65
– Next $12,100 ($60,000 – $47,900) taxed at 6.6% = $798.60
– Total Vermont tax = $1,604.65 + $798.60 = $2,403.25

Tip:
Use the Vermont Department of Taxes’ online calculator to estimate your tax. This helps avoid surprises when you file.

Required Documentation

To file your Vermont state income tax return, you’ll need several documents. Gathering these ahead of time makes the process smoother.

1. Personal Identification

• Social Security Number (SSN) or Individual Taxpayer Identification Number (ITIN)
• Immigration documents if you are not a U.S. citizen (such as visa, green card, or work permit)

2. Income Documents

• W-2 forms from employers (shows wages and tax withheld)
• 1099 forms for other income (self-employment, interest, dividends, etc.)
• Records of any Vermont-source income if you are a nonresident or part-year resident

3. Federal Tax Return

• A copy of your completed federal tax return (Form 1040), since Vermont starts with your federal taxable income

4. Vermont-Specific Forms

• Form IN-111: Vermont Income Tax Return (required for most filers)
  Official link to Vermont Form IN-111
• Form IN-113: Income Adjustment Schedule (if you have Vermont-specific additions or subtractions)
• Form IN-112: Nonresident and Part-Year Resident Income Allocation (if you lived in Vermont part of the year or earned Vermont income as a nonresident)

5. Proof of Deductions and Credits

• Receipts for child care, education expenses, or other deductions
• Documentation for tax credits (such as the Earned Income Tax Credit)

6. Payment Information

• Bank account details for direct deposit of refunds or electronic payment of taxes owed

Tip:
Keep copies of all documents for at least three years in case the Vermont Department of Taxes asks for proof.

Application Process Overview

Filing your Vermont state income tax return involves several steps. Here’s a simple breakdown:

Step 1: Gather All Documents

Collect your W-2s, 1099s, federal tax return, and Vermont forms. Make sure you have your SSN or ITIN and any immigration documents.

Step 2: Complete Your Federal Tax Return

You must finish your federal tax return first, as Vermont uses your federal taxable income as the starting point.

Step 3: Adjust for Vermont-Specific Rules

Vermont may require you to add or subtract certain types of income. For example:
– Add: Interest from non-Vermont municipal bonds
– Subtract: Interest from U.S. government bonds

Use Form IN-113 if you have these adjustments.

Step 4: Calculate Your Vermont Tax

Apply the correct tax brackets to your taxable income. Remember, the rates are marginal, so only the income in each bracket is taxed at that rate.

Step 5: Claim Credits and Deductions

Vermont offers several tax credits, including:
– Child & Dependent Care Credit: 24% of the federal credit
– Elderly or Disabled Credit: 24% of the federal credit
– Earned Income Tax Credit (EITC): 36% of the federal EITC

Claim these credits on your Vermont return if you qualify.

Step 6: File Your Return

You can file:
– Electronically: Through the Vermont Department of Taxes’ online portal or approved tax software
– By Mail: Send your completed forms to the address listed in the instructions

Official Vermont Department of Taxes portal:
https://tax.vermont.gov/individuals/income-tax

Step 7: Pay Any Tax Owed

If you owe tax, pay online, by check, or set up a payment plan if needed. Vermont offers payment options for those who cannot pay in full by the deadline.

Step 8: Keep Records

Save copies of your return, W-2s, and all supporting documents.

Practical Tips for Meeting Vermont Income Tax Requirements

Filing taxes in Vermont can be straightforward if you follow these tips:

• Start Early: Don’t wait until April. Gather documents and start your return as soon as you have your W-2s and 1099s.
• Double-Check Your Residency Status: If you moved during the year, make sure you file as a part-year resident or nonresident as needed.
• Use the Correct Tax Brackets: Vermont’s brackets are different from federal ones. Make sure you use the Vermont rates and brackets for your filing status.
• Claim All Credits: Many immigrants and low-income families miss out on credits like the EITC. Check if you qualify.
• Get Help if Needed: The Vermont Department of Taxes offers phone support and online resources. Community organizations and tax clinics can also help, especially for immigrants and non-English speakers.
• File Electronically: E-filing is faster, reduces errors, and speeds up refunds.
• Check Withholding: If you work in Vermont, your employer should withhold state income tax from your paycheck. Make sure the amount is correct to avoid owing money at tax time.

Common Concerns for Immigrants and Newcomers

1. What if I don’t have a Social Security Number?
You can apply for an Individual Taxpayer Identification Number (ITIN) from the IRS. Vermont accepts ITINs for tax filing.

2. Will filing taxes affect my immigration status?
Filing taxes as required shows you are following U.S. laws, which can help with future immigration applications. Not filing when required can cause problems.

3. What if I made a mistake on my return?
You can file an amended return using Vermont’s Form IN-111. If you owe more tax, pay as soon as possible to reduce penalties.

4. Can I get help in another language?
The Vermont Department of Taxes provides some forms and instructions in other languages. Community organizations may also offer translation help.

5. What if I can’t pay my tax bill?
Contact the Vermont Department of Taxes to set up a payment plan. Paying something is better than ignoring the bill.

6. Are there penalties for late filing or payment?
Yes. Vermont charges penalties and interest for late returns or payments. File and pay on time to avoid extra costs.

How Vermont’s Tax System Compares

Vermont’s state income tax rates and brackets are higher than many other states, especially at the top end. However, the system is designed to be fair, with higher earners paying more. The state also offers generous credits to help lower-income families.

• Top rate: 8.75% (for high earners)
• Lowest rate: 3.35% (for lower incomes)
• Tax credits: Help reduce the tax burden for families, the elderly, and low-income workers

According to analysis by VisaVerge.com, Vermont’s tax system is considered moderately progressive, meaning it tries to balance the need for state revenue with fairness to taxpayers. Policymakers in Vermont 🇺🇸 have kept the rates and brackets stable for 2025, with no major changes announced.

Official Resources and Where to Get Help

For the most accurate and up-to-date information, always check the Vermont Department of Taxes website. Here you’ll find:

• Tax forms and instructions
• Withholding tables for employers
• Online calculators
• Contact information for phone and email support

Official Vermont Department of Taxes website:
https://tax.vermont.gov/individuals/income-tax

You can also call the Vermont Department of Taxes at (802) 828-2505 for help.

Actionable Takeaways

• Check if you need to file: Review your residency and income status.
• Gather documents early: W-2s, 1099s, federal return, Vermont forms.
• Use the correct tax brackets: Apply Vermont’s 2025 rates to your taxable income.
• Claim all credits: Don’t miss out on valuable tax credits.
• File on time: Returns are due April 15, 2025.
• Get help if needed: Use official resources or community organizations.

By following these steps and using the resources provided, you can meet Vermont’s state income tax requirements with confidence. Filing your taxes correctly not only keeps you in good standing with the state but can also support your immigration journey and financial well-being.

Learn Today

Tax Return → A document filed with the tax authority reporting income and taxes owed or refunded.
ITIN → Individual Taxpayer Identification Number used by noncitizens without a Social Security Number to file taxes.
Marginal Tax Rate → Tax percentage applied only to the income within a specific tax bracket, not total income.
Part-Year Resident → Someone who lived in Vermont during part of the year and must report income earned there.
Earned Income Tax Credit → A refundable credit that reduces tax owed for eligible low-income workers.

This Article in a Nutshell

Vermont’s state income tax requires filing for residents and certain nonresidents earning income here. For 2025, tax rates reach up to 8.75%, with specific brackets. Immigrants must understand filing criteria, documentation, and credits, ensuring compliance and maximizing refunds with proper planning and use of Vermont’s resources.
— By VisaVerge.com