Vermont's income tax tops out at a high 8.75%, but its lowest bracket, 3.35%, is wide, running to about $47,900, so most full-time workers pay a moderate effective rate despite the steep top rate.
Combined with a standard deduction and a personal exemption, that wide bottom bracket keeps Vermont reasonable for middle earners. Here is how it works on your paycheck, especially next to no-tax New Hampshire across the river. See your exact take-home with the free Vermont paycheck calculator.
How Vermont's income tax works
Vermont uses four brackets: 3.35% up to $47,900, 6.6% to $116,000, 7.6% to $242,000, and 8.75% above that (single filer). It applies after a standard deduction ($6,500 single / $13,050 married) and a $4,800 personal exemption per person. There is no local income tax.
Because the 3.35% band is wide and the deduction and exemption shield the first chunk of income, a typical worker's effective rate is far below the 8.75% headline.
Vermont subtracts a standard deduction ($6,500 single / $13,050 married for 2025) plus a $4,800 personal exemption for each person on the return before the brackets apply, so a household with dependents shields several thousand dollars more than a single filer. With the 3.35% band running all the way to $47,900, a typical single salary is taxed mostly at 3.35%, with only the top slice reaching 6.6%.
| Taxable income | Rate |
|---|---|
| $0 – $47,900 | 3.35% |
| $47,900 – $116,000 | 6.6% |
| $116,000 – $242,000 | 7.6% |
| Over $242,000 | 8.75% |
Your take-home on a $65,000 salary in Vermont
Here is how a $65,000 salary breaks down for a single filer, using 2026 federal and FICA figures alongside Vermont's four brackets from 3.35% to 8.75%.
| Item | Annual |
|---|---|
| Federal income tax | $5,620 |
| FICA (Social Security + Medicare) | $4,973 |
| Vermont income tax | $1,987 |
| Take-home pay | $52,420 |
| Percent of gross kept | 80.6% |
On a $65,000 salary a single filer owes about $1,987 in Vermont income tax, an effective rate near 3.1%, and keeps roughly $52,420, or 80.6% of gross. That is less than the 8.75% top rate suggests, but still noticeably more tax than a worker pays across the Connecticut River in no-income-tax New Hampshire. Compare with New Hampshire.
Vermont's take-home pay across salaries
Estimated annual take-home for a single filer at common salaries, using 2026 federal and FICA figures alongside Vermont's four brackets from 3.35% to 8.75%. Open the Vermont paycheck calculator to add a 401(k), HSA, or a different filing status.
| Annual salary | Take-home pay | % kept |
|---|---|---|
| $40,000 | $33,359 | 83.4% |
| $60,000 | $48,733 | 81.2% |
| $80,000 | $62,133 | 77.7% |
| $100,000 | $74,883 | 74.9% |
| $150,000 | $105,967 | 70.6% |
A wide low bracket under a high top rate
Vermont's structure is the opposite of states whose top rate hits early: the 8.75% rate only applies above $242,000, while the wide 3.35% band covers most of a typical salary. So the scary top rate is mostly a high-earner story.
Vermont exempts Social Security for lower- and middle-income retirees and offers some retirement-income exclusions, so retirees often pay below the wage rates.
That $4,800-per-person exemption rewards larger households, and because the 7.6% and 8.75% bands do not begin until $116,000 and $242,000, the brackets that sound punishing in headlines are almost entirely a high-earner concern. For an ordinary salary, Vermont behaves like a moderate-rate state.
How to keep more of your Vermont paycheck
Because Vermont starts from a federal-style base, a traditional 401(k) and HSA lower your Vermont and federal taxable income together (and the HSA also avoids FICA), the simplest way to push your take-home higher.