Vermont tax deductions and write-offs (2026)

Partly. Starting in tax year 2025 (Act 71), Vermont fully exempts military retirement and survivor benefit income when federal AGI is $125,000 or less. The exemption phases out between $125,000 and $175,000, and none is allowed at $175,000 or above. In the phase-out range, the exempt share is ($175,000 minus AGI) divided by $50,000. The same rules apply to military survivor benefits. S.17, a 2026 bill for a full exemption, had not been enacted when we checked. Other retirement income: Private pensions and 401(k)/IRA withdrawals are taxed with no general retirement exclusion.

Yes. Private pensions and 401(k)/IRA withdrawals are taxed with no general retirement exclusion. The Vermont DOR page says AGI up to $60,000 single / $75,000 joint, while the statute describes a phase-out between $55,000–$65,000 single / $70,000–$80,000 joint.

Partly. Taxable Social Security is fully exempt if AGI is $55,000 or less (single, head of household, married filing separately, widow(er)) or $70,000 or less (married filing jointly). It phases out until it disappears at $65,000 and $80,000 respectively. These thresholds come from Act 71 of 2025 and are fixed in statute (32 V.S.A. 5830e), not indexed. No 2026 change was enacted (H.74 and H.878 did not pass). The DOR page's introductory text also conflicts with its own table; the table matches the statute.

Yes: Vermont offers the Vermont Earned Income Tax Credit, 38% of the federal EITC with qualifying children; 100% without qualifying children (refundable). Act 71 of 2025 raised the rate for workers without children to 100%, effective from tax year 2025. Filers who would qualify except for lacking an SSN (e.g., ITIN filers) are also eligible. Prorated for part-year residents.

Only instead of income tax: itemizers in Vermont pick sales tax (6% state rate, about 6.43% with local taxes) or state income tax, whichever is bigger. Instead of sales tax, vehicles pay a 6% motor vehicle purchase and use tax, and the 1% local option tax does not apply to them.

Yes: Vermont offers the Renter Credit. Refundable credit for renters of any age, equal to 10% of HUD fair market rent for a unit of your household size in your county (reduced at higher incomes); claimed on Form RCC-146. Vermont domicile all year; rented in Vermont at least six months; cannot be claimed as a dependent; household income under county- and household-size limits based on 65% of area median income.

Yes on your federal return if you itemize, within the $40,400 SALT cap. Vermont adds its own break: Property Tax Credit up to $5,600 (education) plus $2,400 (municipal) for homesteads with 2025 household income up to $115,400.

No: Vermont doesn't base registration on your car's value, so it isn't deductible as personal property tax. A gas pleasure car pays a flat $91 for one year ($89 fee plus $2 Clean Air Fund fee); purchase tax is one-time.

Vermont taxes income up to 8.75% and exempts Social Security for low and middle incomes.

Yes on your Vermont return: 10% credit on first $2,500 per beneficiary per taxpayer ($5,000 joint; max $250 / $500). Only contributions to the state's own plan count. VT 529 only; gift contributions to others' accounts qualify; 10% of any nonqualified distribution must be repaid, up to credits received.

Yes: $1,000 per child age 6 or younger at year-end. Reduced by $20 per $1,000 of AGI above $125,000 (any filing status), so it's gone at $175,000. Fully refundable; available regardless of SSN/ITIN status.

Yes, as a business expense: Vermont charges $155 to form an LLC; ongoing: $45 annual report. $250 minimum business entity tax for LLCs taxed as partnerships (generally not single-member disregarded LLCs). Annual report due within 3 months of fiscal year end.