Retiring in Vermont: how your income is taxed
Vermont is less tax-friendly for retirees. On a typical retirement income it ranks #46 of 51 for the lowest state income tax.
The rules in Vermont
- Social Security: Social Security is fully exempt for federal AGI up to $55,000 (single, head of household or married filing separately) or $70,000 (joint). The exemption phases out over the next $10,000 of AGI and is gone at $65,000 / $80,000 (Act 71, starting with tax year 2025).
- Pensions: Private pensions are fully taxed. Government pensions: up to $10,000 of CSRS or other federal or state pensions based on work not covered by Social Security may be excluded, subject to income limits. Only one of the Social Security, CSRS or other government-pension exclusions can be claimed.
- 401(k), 403(b) and IRA withdrawals: 401(k) and IRA withdrawals are taxed as ordinary income; Vermont has no general exclusion for them.
- At 65 and older: Filers 65 or older add $1,250 each to the standard deduction (2025 amount, adjusted yearly).
Calculate your Vermont retirement taxes
State income tax in Vermont: $1,415 a year
In Vermont, the 401(k)/IRA amount counts as IRA withdrawals, which don't qualify for the pension exclusion. Enter withdrawals from employer plans such as a 401(k) or 403(b) as pension.
In Vermont you'd pay about $1,415 in state income tax and $4,336 in federal income tax on $70,000 of retirement income, keeping $64,249 (8.2% total).
Vermont ranks #46 of 51 for the lowest state tax on this income. 19 states charge no state income tax on this income.
What retirees pay in Vermont
| Retirement income | State tax (single) | State tax (married) | Federal tax (single) |
|---|---|---|---|
| $24,000 Social Security, $12,000 401(k)/IRA | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA | $1,415 | $389 | $4,336 |
| $40,000 Social Security, $40,000 pension, $50,000 401(k)/IRA, $10,000 other income | $6,302 | $4,288 | $19,812 |
Age 67 or older, 2026 rules including the federal senior deduction. For married couples, income is the household total and both spouses are 67 or older. State estimates apply Vermont's main exclusions and may differ for income-tested credits.
States with lower retirement taxes
Moving to Vermont in retirement?
Compare the tax on your Social Security, pension and 401(k)/IRA income, and typical living costs, with the state you'd leave. These are the states most households moving to Vermont come from (IRS migration data, 2022–2023).
- New York to Vermont
- Massachusetts to Vermont
- New Hampshire to Vermont
- Florida to Vermont
- Connecticut to Vermont
- California to Vermont
Frequently asked questions
Does Vermont tax Social Security?
Partly taxed. Social Security is fully exempt for federal AGI up to $55,000 (single, head of household or married filing separately) or $70,000 (joint). The exemption phases out over the next $10,000 of AGI and is gone at $65,000 / $80,000 (Act 71, starting with tax year 2025).
Does Vermont tax pensions?
Taxed. Private pensions are fully taxed. Government pensions: up to $10,000 of CSRS or other federal or state pensions based on work not covered by Social Security may be excluded, subject to income limits. Only one of the Social Security, CSRS or other government-pension exclusions can be claimed.
Does Vermont tax 401(k) and IRA withdrawals?
Taxed. 401(k) and IRA withdrawals are taxed as ordinary income; Vermont has no general exclusion for them.
Is Vermont a good state to retire for taxes?
For a single retiree with $30,000 Social Security, $20,000 pension, $20,000 401(k)/IRA, Vermont charges about $1,415 in state income tax, ranking #46 of 51 (lowest tax first).
Related
Sources: tax.vermont.gov, tax.vermont.gov (2), tax.vermont.gov (3), ljfo.vermont.gov. Rules reviewed . Some 2026 amounts were not yet published or sources differed; confirm with the state revenue department.