Vermont Financial Calculators

Vermont has one of the highest income tax rates in the country, with a progressive system that tops out at 8.75% — among the steepest in the nation. While the Green Mountain State is celebrated for its quality of life, scenic beauty, and strong communities, workers must account for a significant state tax burden when planning their finances. Our Vermont Paycheck Calculator uses current 2026 federal and Vermont state tax data to compute your precise take-home pay after all withholdings and deductions.

Understanding Vermont Income Taxes

Vermont levies a progressive income tax with four brackets and rates from 3.35% to 8.75%. The lowest rate of 3.35% applies to the first $45,400 of taxable income for single filers ($75,850 for joint filers). The rates step up to 6.6% and 7.6% in the middle brackets, with the top rate of 8.75% applying to income above $229,550 (single) or $278,950 (joint). This top rate is the third-highest in the nation, behind only California and Hawaii, placing Vermont among the most heavily taxed states for high earners.

Vermont workers also face federal income tax, Social Security at 6.2% on wages up to $184,500, and Medicare at 1.45% plus 0.9% on earnings above $200,000. Vermont generally conforms to federal tax definitions, using federal adjusted gross income as the base for state calculations. The state provides its own standard deduction and personal exemption, and offers a state earned income tax credit equal to 38% of the federal credit — one of the most generous state EITCs in the country. Run your income through the Vermont Paycheck Calculator to see the full impact on your net pay.

Employment and Salary Landscape

Vermont's economy is built on healthcare, education, manufacturing, tourism, and agriculture. The healthcare sector is the state's largest employer, anchored by the University of Vermont Medical Center in Burlington. Education is also prominent, with several well-known institutions including the University of Vermont, Middlebury College, and Norwich University contributing to both employment and the local economy. Tourism generates substantial seasonal revenue, driven by ski resorts in winter and the foliage season in autumn.

The median household income in Vermont is approximately $68,000 per year. Burlington, the state's largest city (though small by national standards with a metro population under 230,000), offers the strongest job market and highest wages. The state's manufacturing sector, while smaller than in past decades, includes precision manufacturing, specialty food production, and the craft beverage industry. GlobalFoundries operates a major semiconductor fabrication facility in Essex Junction, providing hundreds of high-tech manufacturing jobs.

Vermont faces a demographic challenge similar to Maine, with an aging population and difficulty attracting and retaining young workers. The state has responded with programs to incentivize remote workers to relocate, and the growth of remote work has brought new residents who earn salaries from out-of-state employers while living in Vermont's rural communities. This trend supports local economies but also drives up housing costs in popular areas.

Cost of Living in Vermont

Vermont's cost of living index is approximately 110.6, about 11% above the national average. Housing is the main driver, with a median home price of approximately $370,000. Popular areas like Burlington, Stowe, and southern Vermont communities near ski resorts command higher prices. More affordable options exist in the Northeast Kingdom and other rural areas of the state, though these areas may have fewer employment options and services.

The state sales tax rate is 6%, with a 1% additional local option tax in some municipalities bringing the maximum to 7%. Groceries, clothing, and prescription medications are exempt from sales tax. Heating costs are a notable expense during Vermont's cold winters, with many homes relying on fuel oil, propane, or wood. Vermont has some of the highest electricity rates in the nation. Healthcare costs are above the national average, consistent with the broader New England region. Overall, the high income tax combined with above-average living costs means that workers need higher gross incomes to achieve the same standard of living as in many other states.

Housing and Property Taxes

Vermont property taxes are among the highest in the nation, with an average effective rate of approximately 1.83%. On the median-priced home of $370,000, annual property taxes come to roughly $6,771. Property taxes in Vermont fund the statewide education system through a unique mechanism where the education tax rate is determined by local school spending relative to the statewide average. This means communities with higher per-pupil spending may face higher education property tax rates.

The Vermont housing market has tightened considerably, driven by limited inventory and increased demand from both local buyers and out-of-state transplants. The pandemic-era surge in remote work accelerated this trend, as workers from higher-cost metropolitan areas discovered they could live in Vermont while maintaining their existing salaries. Vermont offers a property tax adjustment (income-based property tax credit) for homeowners and renters whose property taxes exceed a certain percentage of household income, providing meaningful relief for lower-income residents.

Key Financial Facts About Vermont

• State income tax: 3.35% to 8.75% (four progressive brackets — one of the highest top rates nationally)
• Sales tax: 6% state + 1% local option in some areas (groceries and clothing exempt)
• Property tax: ~1.83% average effective rate (among the highest nationally)
• Median home price: ~$370,000
• Median household income: ~$68,000
• Population: ~650,000
• Capital: Montpelier
• Major employers: UVM Medical Center, GlobalFoundries, state government