Retirement taxes by state
How Vermont taxes retirement income in 2026
Vermont's income tax rates run from 3.35% to 8.75%. Here's how Vermont treats Social Security, retirement-account withdrawals, pensions and Roth conversions in 2026 — and what that means in dollars: a retired couple, both 67, with $98,000 of income pays about $1,779 in Vermont income tax.
Updated October 2026 · 2026 tax year
Vermont at a glance
- Income tax from 3.35% to 8.75%.
- Social Security is exempt with income up to $55,000 ($70,000 joint), fully taxed from $65,000 ($80,000 joint).
- Extra $1,250 deduction per person from age 65.
Vermont retirement tax questions
Does Vermont tax Social Security?
Social Security is exempt with income up to $55,000 ($70,000 joint), fully taxed from $65,000 ($80,000 joint).
Does Vermont tax 401(k) and IRA withdrawals?
Yes, at the state's regular income tax rates. Vermont has no special exclusion for retirement-account withdrawals. Also: extra $1,250 deduction per person from age 65.
Does Vermont tax pensions?
Yes, at the state's regular income tax rates. Vermont has no special pension exclusion.
Does Vermont tax Roth conversions?
Yes. A Roth conversion counts as income in Vermont in the year you convert, taxed at the state's regular rates. Qualified Roth withdrawals later aren't taxed.
What is Vermont's income tax rate in 2026?
Vermont's income tax rates run from 3.35% to 8.75%.
What retirees actually pay in Vermont: three examples
Calculated with Retirology's tax engine under 2026 law, using each state's standard deduction, its retirement breaks and the 2026 federal rules for how much Social Security is taxable. For the retired couple, Vermont ranks 49th lowest of the 50 states and DC.
| Household | Total income | Vermont tax | Share |
|---|---|---|---|
| Retired couple, both 67 $48,000 of Social Security, $40,000 drawn from IRAs and 401(k)s, and $10,000 of qualified dividends | $98,000 | $1,779 | 1.8% |
| Single retiree, 70 $30,000 of Social Security, a $25,000 pension and $15,000 of IRA withdrawals | $70,000 | $1,415 | 2.0% |
| Early-retired couple, both 56, converting to Roth A $60,000 Roth conversion and $20,000 of long-term gains and qualified dividends, living on savings | $80,000 | $1,812 | 2.3% |
State income tax only — before local taxes, property tax relief and credits not listed above. Federal income tax is extra and the same in every state.
Vermont income tax brackets (2026)
Rates apply to Vermont taxable income, after the state's deductions and the retirement breaks above. Brackets are adjusted for inflation each year.
| Single | Rate | Married filing jointly | Rate |
|---|---|---|---|
| Up to $49,400 | 3.35% | Up to $82,500 | 3.35% |
| $49,400 – $119,700 | 6.6% | $82,500 – $199,450 | 6.6% |
| $119,700 – $249,700 | 7.6% | $199,450 – $304,000 | 7.6% |
| Over $249,700 | 8.75% | Over $304,000 | 8.75% |
Details and limits
2025 bracket widths (2026 not yet published). Social Security exempt up to $55k AGI ($70k joint), phasing out by $65k/$80k. Over $150k AGI the tax is at least 3% of AGI.
Sources
Rates and rules for the 2026 tax year, from Retirology's state tax data (reviewed October 2026):
This page explains state tax rules in general terms. It isn't tax advice — check your state's official instructions or a tax professional for your situation.