The Tax Foundation

Research Areas

Vermont

The Facts on Vermont’s Tax Climate

Here are some basic facts on Vermont’s tax system and how it compares to other states:

Tax Freedom Day Arrives on April 19 in Vermont
Tax Freedom Day is the day when Americans finally have earned enough money to pay off their total tax bill for the year. In 2008, Vermont taxpayers had to work until April 19 to pay their total tax bill, ranking it 24th highest in the nation. This is one day later than the national Tax Freedom Day of April 23. The Tax Freedom Days of neighboring states are: New Hampshire, April 15 (ranked 35th); New York, May 5 (ranked 3rd); and Massachusetts, April 28 (ranked 6th).

Tax Freedom Day has been projected using the most up-to-date economic and budget projections from official government agencies. However, Tax Foundation estimates of average state and local tax rates for 2008 will not be released until later this spring as we await more up-to-date data from various government agencies.
Full study of Tax Freedom Day, nationwide and in each state

Vermont's State/Local Tax Burden Among Nation's Highest
During the past three decades, Vermont's state and local tax burden has consistently ranked among the nation's highest. Estimated at 10.3% of income, Vermont's state and local taxes rank 8th highest nationally, above the national average of 9.7%. Vermont taxpayers pay $4,410 per capita in state and local taxes.
Vermont's State-Local Tax Burden, 1977-Present
Other States' State/Local Tax Burdens
Historical Chart Comparing All States' State/Local Tax Burdens from 1977 to 2008

Vermont's 2008 Business Tax Climate Ranks 44th
Vermont ranks 44th in the Tax Foundation's State Business Tax Climate Index. The Index compares the states in five areas of taxation that impact business: corporate taxes; individual income taxes; sales taxes; unemployment insurance taxes; and taxes on property, including residential and commercial property. Ranks of neighboring states are as follows: New Hampshire (7th), New York (48th) and Massachusetts (34th).
50-State Comparison of Business Tax Climates (data only)
2008 State Business Tax Climate Index, Fifth Edition (full study)

Vermont's Individual Income Tax System
Vermont's income tax system is composed of five brackets with a top rate of 9.5% kicking in at $349,700. Among states levying individual income taxes, Vermont's top rate ranks 2nd highest nationally. Vermont's 2005 individual income tax collections were $804 per person, which ranked 20th highest nationally.
50-State Table of Individual Income Tax Rates
50-State Table of State Individual Income Tax Collections
50-State Table of State and Local Individual Income Tax Collections Per Capita

Vermont's Corporate Income Tax System
Vermont’s corporate tax system has three brackets and a top rate of 8.5% on income over $25,000. This top rate ranks 13th highest nationally. In 2006, state-level corporate tax collections (excluding local taxes) were $137.97 per capita, which ranked 27th highest nationally.
50-State Table of Corporate Income Tax Rates, 2000-2008
50-State Table of State and Local Corporate Income Tax Collections Per Capita and Per Household, 2005
50-State Table of State Corporate Income Tax Collections Per Capita, 2006

Vermont's Sales Tax Rate Exceeds National Median; Cigarette Taxes Relatively High
Vermont's sales tax rate stands at 6%, which exceeds the national median of 5.4%. State and local governments combined collect $1,270 per capita in general sales taxes, which ranks 20th highest nationally. Vermont's gasoline tax stands at 20 cents per gallon, which ranks 36th highest nationally. Vermont's cigarette tax stands at $1.79 per pack of twenty and ranks 11th highest nationally.
50-State Table of Sales and Excise Tax Rates
50-State Table of State and Local General Sales and Gross Receipts Tax Collections Per Household and Per Capita, Fiscal Year 2005

Vermont Property Taxes: Comparatively High
Vermont is one of the 37 states that collect property taxes at both the state and local levels. Like most states, local governments collect a majority of the tax. Vermont's localities collected $502,253,000 in property taxes in fiscal year 2004, which is the latest year the Census Bureau published state-by-state property tax collections. At the state level, Vermont collected $448,203,000 in property taxes during FY 2004, making its combined state/local property taxes $950,456,000. That brings its per capita collection to $1,531, which ranks 8th highest nationally.
State property tax collections per capita by state

Federal Tax Burdens and Expenditures: Vermont is a Beneficiary State
Vermont taxpayers benefit slightly more than the average state from federal spending. Per dollar of Federal tax collected, Vermont citizens receive approximately $1.08 in the way of federal spending. This ranks Vermont 26th among all states. In 1995, Vermont received $1.03 in federal spending for every dollar of collected federal taxes (ranked 29th highest). Neighboring states and the amount of federal spending received compared to federal taxes paid were: Massachusetts ($0.82), New Hampshire ($0.71), and New York ($0.79).
Comparing the amount of federal taxes sent to Washington with the amount of federal spending coming back to the state

Articles from the Tax Foundation