Vermont Business Taxes at a Glance
Vermont's tax system ties income tax, property tax, and education funding together in a way few states do. Homeowners file a homestead declaration with their income tax return, and their education property tax depends on it. Tourism businesses collect meals and rooms tax, and since July 2024, employers have paid a payroll tax to fund child care. BOMCAS helps Vermont individuals and businesses work through these rules.
Individual Income Tax
Under Vermont's graduated rates, residents are taxed on worldwide income and nonresidents on what they earn from Vermont sources. Vermont starts from federal taxable income with its own adjustments, including an exclusion for a portion of capital gains and an exemption for Social Security benefits below income thresholds. Vermont also has its own child tax credit and earned income tax credit.
We prepare Vermont returns, apply credits and exclusions, and handle part-year and nonresident filings for people who split time between Vermont and other states.
Homestead Declaration and Property Tax Credit
Vermont funds education largely through a statewide education property tax, with different rates for homestead property and nonhomestead property. Homeowners whose Vermont home is their principal residence must file a homestead declaration each year, usually with the income tax return. If they do not, the home may be taxed at the nonhomestead rate.
Eligible homeowners can also claim a property tax credit, based on household income, which reduces their property tax bill. Renters may be eligible for a renter credit. These filings require household income information that differs from adjusted gross income.
Second-home owners and people moving to Vermont need to understand which rate applies. We prepare homestead declarations, property tax credit claims, and renter credits along with income tax returns.
Business Income Taxes
Corporations doing business in Vermont pay corporate income tax on apportioned income, with a minimum tax based on Vermont gross receipts. S corporations and partnerships also pay a minimum tax and may withhold for nonresident owners. Vermont uses combined reporting for unitary groups. We prepare corporate and entity returns and calculate minimum taxes.
Meals and Rooms Tax and Sales Tax
Vermont's meals and rooms tax applies to restaurant meals, alcoholic beverages served, and short-term lodging, at rates different from the regular sales tax. Some towns add local option taxes on sales, meals, rooms, and alcohol. Ski areas, inns, restaurants, and short-term rentals may collect several of these at once. Short-term rental platforms collect some taxes for hosts, but owners should confirm what is covered.
Vermont's sales and use tax applies to tangible goods and some digital products and services. We register businesses, track local option taxes, and file returns.
The Child Care Contribution
Since July 1, 2024, Vermont employers pay a Child Care Contribution, a payroll tax on wages that funds child care programs. Employers may withhold part of the contribution from employees' wages, up to a limit. Self-employed individuals pay a contribution on their Vermont self-employment income with their income tax return. We set up the contribution in payroll, file the reports, and include it in self-employed individuals' returns.
Payroll and Withholding in Vermont
Vermont employers withhold state income tax, pay the Child Care Contribution, and report unemployment insurance to the Vermont Department of Labor. We process payroll, file the periodic state reports, and reconcile them to the general ledger.
Vermont Retirees
Vermont exempts Social Security benefits for taxpayers under an income limit, with a partial exemption in a phase-out range above it. It also allows a limited exclusion for some other retirement income, such as military retirement pay and certain pensions. Retirees should check where their income falls each year.
Estate Tax
Vermont has its own estate tax, with an exemption amount far below the federal exemption. Estates that owe no federal tax can still owe Vermont tax. We help executors with estate accounting and final returns, working with estate counsel.
Dairy, Maple, Ski Resorts, and Craft Producers
- Ski resorts and tourism: meals and rooms tax, local option taxes, and seasonal staffing
- Dairy and agriculture: farm reporting, current use property programs, and sales tax exemptions
- Maple, food, and craft beverages: inventory, excise records, and sales tax
- Manufacturing: fixed assets and apportionment
- Remote workers and consultants: self-employment income and the Child Care Contribution
Second Homes and Part-Year Residents
Many people own a Vermont ski house or lake camp while living elsewhere. A second home is taxed at the nonhomestead education rate, and rental income from it must be reported on a Vermont nonresident return. Someone who keeps a permanent home in Vermont and spends more than 183 days in the state can be treated as a resident. People moving to Vermont full time file part-year returns and should file the homestead declaration for their new primary home.
Bookkeeping for Vermont Businesses
Vermont bookkeeping should separate meals, rooms, and general sales for tax, track wages for the Child Care Contribution, and record gross receipts for minimum taxes. Our bookkeeping is set up so these figures come straight from the ledger at filing time.
Contact BOMCAS About Vermont
Homeowners filing the homestead declaration, inns and restaurants filing meals and rooms tax, and second-home owners can contact BOMCAS for a remote review. Over time, this section will hold pages for specific Vermont cities and services. Return to the BOMCAS home page or see our United States services. Nothing here is advice for a particular taxpayer, and the details depend on your situation.
Talk to BOMCAS About Your Vermont Taxes
Have a question about your Vermont filings, payroll or bookkeeping? Contact BOMCAS or use the contact form below, and we will get back to you as soon as possible. You can also browse all United States services.