Vermont

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.

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.

Vermont 3% Alternative Minimum Tax applies if it exceeds regular Vermont income tax

“A tax is imposed on every individual subject to this chapter equal to 3% of the taxpayer's Vermont alternative minimum taxable income, reduced by the applicable exemption amount, if such tax exceeds the tax computed under §5822.”

Note: Vermont AMT base starts from federal AMTI and makes Vermont-specific adjustments. For typical CG-heavy filers with high regular income, the VT AMT generally does not bind because the regular tax (8.75% top) already exceeds 3%. The AMT matters primarily for ISO holders or accelerated-depreciation real estate sales.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.

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.