Income Taxes in Vermont
Vermont levies a real, current, and genuinely graduated state individual income tax across five brackets -- 3.35%, 6.60%, 7.60%, and a top marginal rate of 8.75% applying to taxable income above $229,550 for single filers in tax year 2026 -- among the higher top marginal state income tax rates in the country.
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Learn moreA real, graduated five-bracket structure, with an 8.75% top marginal rate
Vermont's individual income tax is real, current, and genuinely graduated: 3.35%, 6.60%, 7.60%, and a top marginal rate of 8.75%, with that top bracket applying to taxable income above $229,550 for single filers in tax year 2026, per this pass's research (corroborated across Tax Foundation, ustax.tools, and countrytaxcalc.com). This is not a flat rate applying to all income -- a filer's effective rate runs meaningfully lower than 8.75% once the lower brackets are accounted for, and only income above the $229,550 threshold is taxed at the top rate. Vermont's 8.75% top marginal rate runs genuinely among the higher top rates in the country, though below California's 13.3% and the highest brackets in New York and Hawaii.
Who this affects most, and what it means for a typical mover
Vermont's graduated structure means a filer's actual tax bill depends heavily on income level -- lower- and middle-income filers pay Vermont's lower brackets (3.35%-7.60%) on the corresponding portions of their income, while only higher earners (above the $229,550 single-filer threshold) pay the 8.75% top rate on income above that line. A prospective mover, particularly a higher earner or one considering Vermont specifically for its lifestyle and safety strengths, should model their actual effective rate directly rather than assuming the 8.75% headline rate applies to their full income.
A real, high burden that sits alongside a real, high property tax
Vermont's graduated income tax sits alongside a real, current statewide effective property tax rate Tax Foundation ranks 4th highest in the nation (1.51%), layered with a genuinely distinctive homestead/nonhomestead education-property-tax system whose FY2026 bills were projected to rise a real, disclosed 5.9% on average. A prospective mover should weigh both taxes together as part of Vermont's real, high overall tax burden -- see the property-taxes topic for the fuller disclosure.
How Vermont's income tax fits its broader, genuinely mixed cost picture
Vermont's real, high income tax burden sits within a broader cost-of-living picture running approximately 14% above the national average (see the cost-of-living topic), against a median household income ($81,203) that runs only roughly in line with the national figure -- a genuinely more modest offset than this dataset has documented for some other high-tax, high-cost states. A prospective mover should weigh Vermont's real tax and cost burden directly against its genuine strengths in crime, healthcare access, and job-market conditions, rather than treating either side of that picture alone.
Key takeaways
- Vermont levies a real, graduated income tax across five brackets (3.35%, 6.60%, 7.60%, 8.75%), with the 8.75% top marginal rate applying only to taxable income above $229,550 for single filers in 2026.
- Vermont's 8.75% top rate runs among the higher top marginal state income tax rates in the country, though below California's, New York's, and Hawaii's highest brackets.
- A filer's effective rate runs meaningfully below the 8.75% headline once the lower brackets are accounted for -- model your actual rate directly rather than assuming the top rate applies to your full income.
- Vermont's high income tax sits alongside a real, high property tax burden (4th highest in the nation) -- weigh both together as part of Vermont's real, high overall tax picture.
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