Vermont
VT · state · 19 cited facts
| Category | Provision | Value | Source |
|---|---|---|---|
| trust-nexus | Incomplete-gift nongrantor trust / ING (income tax reach) | REACHED: pure settlor-domicile rule; VT residency attaches at funding and no apportionment or nexus concession exists. No Kaestner-response guidance found | sources (1)32 V.S.A. 5811(11)(B)(ii)(I); 5822(a); Form FIT-161 instructions · high confidence · as of 2026-07-13 · TY 2026 Vermont taxes a resident settlor's irrevocable inter vivos trust permanently from funding Resident trust includes a trust consisting of the property of a person domiciled in this State at the time such property was transferred to the trust, if such trust or portion of a trust was then irrevocable.https://legislature.vermont.gov/statutes/section/32/151/05811 |
| rate | Top income tax rate (TY2025) | 3.35% to 8.75% graduated (8.75% above $421,900 MFJ; capital gains taxed as ordinary income) | sources (1)32 V.S.A. §5822(a) · high confidence · as of 2026-07-02 · TY 2025 Vermont top income tax rate is 8.75% on Vermont taxable income above $421,900 (MFJ, TY2025) (a) A tax is imposed for each taxable year upon the taxable income earned or received in that year by every individual, estate, and trust, subject to income taxation under the laws of the United States, in an amount determined by the following tables... (1) Married individuals filing joint returns and surviving spouses: ... Over $237,950.00 $14,423.00 plus 8.75% of the amount of taxable income over $237,950.00 Note: 32 V.S.A. §5822 imposes a graduated income tax with four rate tiers: 3.35%, 6.6%, 7.6%, and 8.75% (top rate). The quoted table shows the statutory base-year thresholds ($237,950 MFJ top); the statute delegates bracket thresholds to annual inflation adjustment by the Vermont Department of Taxes, so the specific dollar thresholds are DOR-computed for each tax year. For TY2025, the DOR-published MFJ thresholds are $73,950 / $178,150 / $421,900 (above which 8.75% applies). Vermont taxes capital gains as ordinary income at these rates, minus the $5,000 listed-security exclusion for modest gains. MFJ brackets are approximately doubled from single but not exactly, resulting in a partial marriage penalty at high income. https://legislature.vermont.gov/statutes/section/32/151/05822 |
| deduction | LT capital gain exclusion (listed securities only) | $5,000 max per return ONLY for publicly-traded securities; real estate excluded | sources (1)32 V.S.A. §5811(21)(B)(i); Schedule IN-153 Instructions (TY2025) · high confidence · as of 2026-06-10 · TY 2025 Vermont $5,000 LT capital gain exclusion listed securities ONLY (real estate excluded) From Vermont income there shall be subtracted capital gain from the sale of a qualified investment, to the extent that the investment consists of an interest in a publicly traded corporation, and the long-term capital gain does not exceed $5,000. Note: The $5,000 exclusion is capped per return (not per taxpayer). It applies ONLY to publicly-traded securities. Real estate, collectibles, limited partnership interests, and other non-listed assets are excluded from this prong. A separate 40% exclusion applies to qualified farm/business property sales (32 V.S.A. §5811(21)(B)(ii)). For a pure large-portfolio LT gain, the $5,000 cap is negligible at high income. https://legislature.vermont.gov/statutes/section/32/151/05811 |
| surcharge | Vermont 3% minimum tax on federal AGI | Greater of regular tax or 3% of federal AGI when AGI > $150,000 (rarely binds for high ordinary income) | sources (1)32 V.S.A. §5822(a)(6) · high confidence · as of 2026-07-22 · TY 2025 Vermont tax is the greater of the regular bracket tax or 3% of federal AGI when AGI exceeds $150,000 If the federal adjusted gross income of the taxpayer exceeds $150,000.00, then the tax calculated under this subsection shall be the greater of the tax calculated under subdivisions (1)-(5) of this subsection or three percent of the taxpayer's federal adjusted gross income. Note: This is a MINIMUM TAX on the greater of the regular graduated tax or 3% of FEDERAL AGI (not an alternative minimum tax on a separate AMTI base; the prior citation to §5830b was wrong, that section is the Entrepreneurs' Seed Capital Fund credit). It binds only when the regular tax falls below 3% of AGI, which for a large capital-gain filer is rare because VT taxes those gains near-ordinary at up to 8.75%. It matters when big exclusions or deductions push Vermont taxable income far below federal AGI. Base is the full federal AGI, gain included. https://legislature.vermont.gov/statutes/section/32/151/05822 |
| conformity | Loss carryforward | Conforms to IRC §1212 indefinite federal carryforward applies | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| muni-instate | In-state muni bond interest | Exempt: 32 V.S.A. §5811(21)(A)(i) addition applies only to non-Vermont obligations; VT bonds not added back | sources (1)32 V.S.A. §5811(21)(A)(i) · high confidence · as of 2026-06-18 · TY 2025 VT taxes out-of-state muni bond interest; VT bonds exempt 32 V.S.A. §5811(21)(A)(i) interest income from non-Vermont state and local obligations Note: 32 V.S.A. §5811(21)(A)(i) defines additions to Vermont income to include 'interest income from non-Vermont state and local obligations.' Vermont bonds are exempt by negative implication. https://legislature.vermont.gov/statutes/section/32/151/05811 |
| muni-outstate | Out-of-state muni bond interest | Taxable: 32 V.S.A. §5811(21)(A)(i): 'interest income from non-Vermont state and local obligations' is a Vermont income addition | sources (1)32 V.S.A. §5811(21)(A)(i) · high confidence · as of 2026-06-18 · TY 2025 VT taxes out-of-state muni bond interest; VT bonds exempt 32 V.S.A. §5811(21)(A)(i) interest income from non-Vermont state and local obligations Note: 32 V.S.A. §5811(21)(A)(i) defines additions to Vermont income to include 'interest income from non-Vermont state and local obligations.' Vermont bonds are exempt by negative implication. https://legislature.vermont.gov/statutes/section/32/151/05811 |
| qoz-conformity | QOZ conformity (IRC §1400Z-2) | Conforms to IRC §1400Z-2 QOZ gain deferral and 10-year exclusion via fixed-date conformity (IRC as of December 31, 2024; §1400Z-2 predates the cutoff) | sources (1)32 V.S.A. §5824 · high confidence · as of 2026-07-02 · TY 2025 Vermont conforms to IRC §1400Z-2 QOZ gain deferral and exclusion via fixed-date conformity (IRC as of December 31, 2024) The statutes of the United States relating to the federal income tax, as in effect on December 31, 2024, but without regard to federal income tax rates under 26 U.S.C. § 1, are hereby adopted for the purpose of computing the tax liability under this chapter and shall continue in effect as adopted until amended, repealed, or replaced by act of the General Assembly. Note: Vermont is FIXED-DATE conformity (IRC as in effect on December 31, 2024), not rolling. §1400Z-2 predates that cutoff, so its QOZ deferral and exclusion flow into the Vermont base; federal amendments after December 31, 2024 are not adopted until the General Assembly updates §5824. https://legislature.vermont.gov/statutes/section/32/151/05824 |
| qsbs-conformity | QSBS conformity (IRC §1202) | Conforms to IRC §1202 QSBS gain exclusion via fixed-date conformity (IRC as of December 31, 2024); no addback | sources (1)32 V.S.A. §5824 · high confidence · as of 2026-07-02 · TY 2025 Vermont conforms to IRC §1202 QSBS gain exclusion via fixed-date conformity (IRC as of December 31, 2024); no addback The statutes of the United States relating to the federal income tax, as in effect on December 31, 2024, but without regard to federal income tax rates under 26 U.S.C. § 1, are hereby adopted for the purpose of computing the tax liability under this chapter and shall continue in effect as adopted until amended, repealed, or replaced by act of the General Assembly. Note: Vermont is FIXED-DATE conformity (IRC as in effect on December 31, 2024), not rolling. §1202 as of that date (pre-OBBBA: $10M cap, 5-year hold) flows into the Vermont base with no addback; the OBBBA's post-July-2025 §1202 changes are not adopted until the General Assembly updates §5824. https://legislature.vermont.gov/statutes/section/32/151/05824 |
| agency-obligations | GSE bond interest (FNMA/FHLMC) | Taxable: Vermont FIT-161 instructions explicitly state FNMA, FHLMC, and GNMA income is taxable; not 'direct obligations of the U.S. government' under 32 V.S.A. §5811(21)(B)(i) | sources (1)Vermont Department of Taxes, Form FIT-161 (Fiduciary Income Tax Return) 2023 Instructions, Line 4a · medium confidence · as of 2026-06-20 · TY 2025 Vermont FIT-161 instructions explicitly state FNMA, FHLMC, and GNMA income is taxable in Vermont Income from repurchase agreements, securities of FNMA, FHLMC or GNMA, or other investments that are not direct obligations of the U.S. government are also taxable. For more information, see Technical Bulletin TB-24, Exemption of Income of U.S. Government Obligations on the Department's website. Note: 32 V.S.A. §5811(21)(B)(i): Vermont subtraction covers only 'income from U.S. government obligations'; FNMA/FHLMC are GSEs that do not qualify as direct U.S. obligations. TB-24 (Exemption of Income of U.S. Government Obligations) provides additional guidance on the direct-obligation test. https://tax.vermont.gov/sites/tax/files/documents/FIT-161-Instr-2023.pdf |
| dividend-qualified | Qualified dividend income | Ordinary rate: 32 V.S.A. §5824 computes Vermont income 'without regard to federal income tax rates under 26 U.S.C. §1'; §5811(21)(B)(ii) further nets QDI out of the capital gain exclusion base | sources (1)32 V.S.A. §5824 · high confidence · as of 2026-06-20 · TY 2025 Vermont computes income tax without regard to IRC §1 rate schedules; qualified dividend preference not adopted; QDI explicitly netted out of capital gain exclusion but without regard to federal income tax rates under 26 U.S.C. § 1 Note: Vermont §5824 expressly decouples from IRC §1 rate schedules, denying the federal qualified-dividend preferential rate. Additionally, 32 V.S.A. §5811(21)(B)(ii) explicitly reduces the capital gain exclusion base by qualified dividends ('with respect to adjusted net capital gain income as defined in 26 U.S.C. § 1(h) reduced by the total amount of any qualified dividend income'), confirming QDI is in the ordinary income pool, not the capital gain preference. https://legislature.vermont.gov/statutes/section/32/151/05824 |
| treasury | U.S. Treasury interest | Exempt: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations (T-bills, T-notes, T-bonds, TIPS, I-bonds) | sources (1)31 U.S.C. §3124(a) · high confidence · as of 2026-06-20 · TY 2025 U.S. Treasury interest exempt from Vermont income tax: 31 U.S.C. §3124(a) prohibits state taxation of U.S. government obligations Stocks and obligations of the United States Government are exempt from taxation by a State or political subdivision of a State. The exemption applies to each form of taxation that would require the obligation, the interest on the obligation, or both, to be considered in computing a tax. Note: 31 U.S.C. §3124(a) preempts state income taxation of U.S. government obligations. Covers T-bills, T-notes, T-bonds, TIPS, and I-bonds. Most states allow a deduction or subtraction by statute cross-referencing this federal preemption. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title31-section3124 |
| fhlb-ffcb | FHLB and FFCB bond interest | Exempt: 12 U.S.C. §1433 (Federal Home Loan Bank Act) and 12 U.S.C. §2023 (Farm Credit Act) mandate state tax exemption for FHLB and FFCB securities | sources (2)12 U.S.C. §1433 (Federal Home Loan Bank Act) · high confidence · as of 2026-06-20 · TY 2025 FHLB and FFCB bond interest exempt from Vermont income tax: federal enabling statutes mandate state tax exemption Any security issued under this chapter by a Federal home loan bank, including the stock thereof, shall be exempt from taxation, except taxes upon real estate, by any State, county, municipality, or local taxing authority. Note: 12 U.S.C. §1433 (FHLB) and 12 U.S.C. §2023 (FFCB/Farm Credit Act) both mandate state tax exemption for securities issued under their chapters. Contrasts with FNMA (12 U.S.C. §§1719(e), 1723a(c)) and FHLMC (12 U.S.C. §1455(a)) which have no bondholder exemption statute and whose interest is taxable by income-tax states. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section1433&num=0&edition=prelim12 U.S.C. §2023 (Farm Credit Act) · high confidence · as of 2026-06-20 · TY 2025 Farm Credit Act: notes, bonds, debentures, and other obligations of Farm Credit Banks are instrumentalities of the United States exempt from all State, municipal, and local taxation The mortgages held by the Farm Credit Banks and the notes, bonds, debentures, and other obligations issued by the banks shall be considered and held to be instrumentalities of the United States and, as such, they and the income therefrom shall be exempt from all Federal, State, municipal, and local taxation, other than Federal income tax liability of the holder thereof under the Public Debt Act of 1941 (31 U.S.C. 3124). Note: 12 U.S.C. §2023 explicitly covers 'the income therefrom' (i.e., interest payments to bondholders), exempting it from all State and local taxation. The only carve-out is federal income tax on the holder. Parallel to 12 U.S.C. §1433 (FHLB Act), which exempts FHLB securities from state taxation. Together §1433 and §2023 mandate state and local tax exemption for both FHLB and FFCB bond interest. Shared across all jurisdictions: a single object reference satisfies buildCitationIndex() identity check. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title12-section2023&num=0&edition=prelim |
| carryback | Capital loss carryback | None: IRC §1212(b) provides carryforward only for non-corporate taxpayers; no carryback to prior years | sources (1)IRC §1212(b) · high confidence · as of 2026-06-21 · TY 2025 IRC §1212(b): capital losses carry forward only for non-corporate taxpayers; no carryback In the case of a taxpayer other than a corporation, if there is a net capital loss for any taxable year: (1) the excess of the net short-term capital loss over the net long-term capital gain for such year shall be a short-term capital loss in the succeeding taxable year, and (2) the excess of the net long-term capital loss over the net short-term capital gain for such year shall be a long-term capital loss in the succeeding taxable year. Note: IRC §1212(b) limits non-corporate taxpayers to carrying losses forward only ('succeeding taxable year'). IRC §1212(a), which allows a 3-year carryback, applies only to corporations. For conformity states, the federal carryforward amount flows to the state return unchanged. https://uscode.house.gov/view.xhtml?req=granuleid:USC-prelim-title26-section1212&num=0&edition=prelim |
| character | Long-term capital gains treatment | Ordinary rate: Vermont taxes all capital gains as ordinary income at rates up to 8.75%; no preferential long-term rate (32 V.S.A. § 5822) | sources (1)32 V.S.A. §5822(a) · high confidence · as of 2026-07-02 · TY 2025 Vermont top income tax rate is 8.75% on Vermont taxable income above $421,900 (MFJ, TY2025) (a) A tax is imposed for each taxable year upon the taxable income earned or received in that year by every individual, estate, and trust, subject to income taxation under the laws of the United States, in an amount determined by the following tables... (1) Married individuals filing joint returns and surviving spouses: ... Over $237,950.00 $14,423.00 plus 8.75% of the amount of taxable income over $237,950.00 Note: 32 V.S.A. §5822 imposes a graduated income tax with four rate tiers: 3.35%, 6.6%, 7.6%, and 8.75% (top rate). The quoted table shows the statutory base-year thresholds ($237,950 MFJ top); the statute delegates bracket thresholds to annual inflation adjustment by the Vermont Department of Taxes, so the specific dollar thresholds are DOR-computed for each tax year. For TY2025, the DOR-published MFJ thresholds are $73,950 / $178,150 / $421,900 (above which 8.75% applies). Vermont taxes capital gains as ordinary income at these rates, minus the $5,000 listed-security exclusion for modest gains. MFJ brackets are approximately doubled from single but not exactly, resulting in a partial marriage penalty at high income. https://legislature.vermont.gov/statutes/section/32/151/05822 |
| estate-rate | Estate tax rate (TY2025) | 16% flat on Vermont taxable estate above $5,000,000; gifts within two years of death added back (32 V.S.A. § 7442a) | sources (1)32 V.S.A. § 7442a · high confidence · as of 2026-06-21 · TY 2025 Vermont estate tax: 16% flat rate on Vermont taxable estate above $5,000,000 (fixed exemption) $5,000,000.00 or more | 16 percent of the excess over $5,000,000.00 Note: Vermont estate tax is a flat 16% on the Vermont taxable estate exceeding $5,000,000. The $5M exemption has been fixed since 2020 (Act 2019, No. 71, § 5). VT adds back taxable gifts made within two years of death. Not linked to federal exclusion. https://legislature.vermont.gov/statutes/section/32/190/07442a |
| estate-exemption | Estate tax exemption (TY2025) | $5,000,000 fixed; not inflation-adjusted; in place since 2020; not linked to federal exclusion (32 V.S.A. § 7442a) | sources (1)32 V.S.A. § 7442a · high confidence · as of 2026-06-21 · TY 2025 Vermont estate tax: 16% flat rate on Vermont taxable estate above $5,000,000 (fixed exemption) $5,000,000.00 or more | 16 percent of the excess over $5,000,000.00 Note: Vermont estate tax is a flat 16% on the Vermont taxable estate exceeding $5,000,000. The $5M exemption has been fixed since 2020 (Act 2019, No. 71, § 5). VT adds back taxable gifts made within two years of death. Not linked to federal exclusion. https://legislature.vermont.gov/statutes/section/32/190/07442a |
| filing-status-partial | Filing status: partial MFJ bracket widening | Yes: graduated income tax up to 8.75% (TY2025); MFJ bracket thresholds are partially wider than single filer but not fully doubled; marriage penalty for high-income couples where brackets converge. | sources (1)32 V.S.A. §5822(a) · high confidence · as of 2026-07-02 · TY 2025 Vermont top income tax rate is 8.75% on Vermont taxable income above $421,900 (MFJ, TY2025) (a) A tax is imposed for each taxable year upon the taxable income earned or received in that year by every individual, estate, and trust, subject to income taxation under the laws of the United States, in an amount determined by the following tables... (1) Married individuals filing joint returns and surviving spouses: ... Over $237,950.00 $14,423.00 plus 8.75% of the amount of taxable income over $237,950.00 Note: 32 V.S.A. §5822 imposes a graduated income tax with four rate tiers: 3.35%, 6.6%, 7.6%, and 8.75% (top rate). The quoted table shows the statutory base-year thresholds ($237,950 MFJ top); the statute delegates bracket thresholds to annual inflation adjustment by the Vermont Department of Taxes, so the specific dollar thresholds are DOR-computed for each tax year. For TY2025, the DOR-published MFJ thresholds are $73,950 / $178,150 / $421,900 (above which 8.75% applies). Vermont taxes capital gains as ordinary income at these rates, minus the $5,000 listed-security exclusion for modest gains. MFJ brackets are approximately doubled from single but not exactly, resulting in a partial marriage penalty at high income. https://legislature.vermont.gov/statutes/section/32/151/05822 |
| migration-loss-conformity | Migration loss carryforward conformity | Full conform (structural inference): Vermont computes its income tax from the federal base, so an imported federal section 1212 capital-loss carryforward flows through to offset post-residency gains; no published guidance addresses the imported pre-residency carryforward. | sources (1)32 V.S.A. §5822(a) · medium confidence · as of 2026-07-03 · TY 2025 Vermont conforms to the federal capital-loss base; treatment of an imported pre-residency section 1212 carryforward is a structural inference A tax is imposed for each taxable year upon the taxable income earned or received in that year by every individual, estate, and trust, subject to income taxation under the laws of the United States, in an amount determined by the following tables, and adjusted as required under this section. Note: 32 V.S.A. §5822(a) imposes the tax on taxable income subject to income taxation under the laws of the United States, so Vermont builds on the federal base and the federal Section 1212 capital-loss carryover flows through. No published guidance addresses a carryforward imported from a pre-residency year; that application remains a structural inference. https://legislature.vermont.gov/statutes/section/32/151/05822 |