Vermont Standard Deduction

For tax year 2024, the Vermont standard deduction is $14,600.00 for single filers and $29,200.00 for married couples filing jointly, as published by the Vermont Department of Taxes. It is subtracted from your gross income to give your Vermont taxable income.

The standard deduction lowers your Vermont taxable income, which is the figure the state income tax brackets are applied to. A single filer with $60,000.00 of gross income and the $14,600.00 standard deduction has $45,400.00 of Vermont taxable income before any other adjustments.

Take whichever is larger. If your total itemised deductions allowed by Vermont exceed the standard deduction of $14,600.00 (single) or $29,200.00 (married jointly), itemising lowers your taxable income more. Otherwise the standard deduction is simpler and larger. Check the rules with the Vermont Department of Taxes.

Vermont has four brackets for 2024. Single filers pay 3.35% on $0-$45,400; 6.6% on $45,401-$110,050; 7.6% on $110,051-$229,550; and 8.75% on income above $229,550. Married filing jointly thresholds are: 3.35% on $0-$75,850; 6.6% on $75,851-$183,400; 7.6% on $183,401-$279,450; and 8.75% above $279,450. Authority: Vermont Department of Taxes, Vermont Statutes Title 32 §5822.

Vermont taxes capital gains as ordinary income, rather than at the preferential rates that apply at the federal level. Vermont does provide a 40% exclusion for gains from the sale of qualifying Vermont business property held for more than three years (Vermont Statutes Title 32 §5811(21)(B)(i)). However, most investment capital gains, such as stock sales, are taxed at Vermont's regular income tax rates, which can reach 8.75%. This is a significant difference from federal treatment and affects investment planning for Vermont residents.

Vermont is generally considered a relatively high-tax state. Its top income tax rate of 8.75% is among the highest in New England and in the top tier nationally. Vermont also has property taxes that fund its public schools, which can be substantial. Vermont's sales tax rate is 6%. The combination of income, property, and sales tax makes Vermont's overall tax burden higher than the national average. Vermont funds a wide range of public services, including universal pre-kindergarten and a robust school funding system, which contributes to the higher tax levels.

Vermont conforms to the federal standard deduction amounts. For 2024, Vermont's standard deduction is $14,600 for single filers and married filing separately, $29,200 for married filing jointly, and $21,900 for head of household. Unlike some states that maintain their own lower standard deduction amounts, Vermont adopts the federal figures directly. Vermont Statutes Title 32 §5811(21).