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.
| 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 2025 federal and FICA figures alongside Vermont's four brackets from 3.35% to 8.75%.
| Item | Annual |
|---|---|
| Federal income tax | $5,246 |
| FICA (Social Security + Medicare) | $4,973 |
| Vermont income tax | $1,987 |
| Take-home pay | $52,795 |
| Percent of gross kept | 81.2% |
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 $52,795, or 81.2% 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.
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.
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.