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.
Assumptions behind this comparison
The ranking uses a full-year resident, single filer age 67, with $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals under 2026 rules. It models a general private pension and traditional IRA withdrawals. Public or military pension exceptions, early-distribution penalties and itemized deductions require separate checking. Maryland and Indiana estimates include an approximate statewide-average county income tax; other local income taxes are not modeled. A state with no income tax differs from a state that exempts only specified retirement income.
The joint table uses two spouses age 67, with each income category split equally between them. Personal exclusions follow each spouse's own eligible income; some states instead allow a joint cap. The calculator initially assigns household income to you and lets you enter your spouse's actual age and share. Read the source instructions for your pension type.
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, qualifying employer-plan withdrawals can receive the pension exclusion while traditional IRA withdrawals do not. Keep each account in its own field when changing state; the calculator applies the state-specific treatment.
The employer-plan field supports federally taxable private 401(k) / 403(b) retirement distributions owned by someone aged 60 or older. Earlier distributions and Hawaii, Mississippi or Pennsylvania employer-plan scenarios are not calculated; funding or plan retirement eligibility needs a separate check. Enter each amount once; do not include completed rollovers, Roth payments or special public/military plans.
Older shared links did not identify employer-plan withdrawals separately. Pension and IRA amounts have been left unchanged. If an old amount includes 401(k) or 403(b) withdrawals, move that portion into the employer-plan field before comparing states; the tool cannot infer the original account type.
Household totals include taxable private pensions and traditional retirement withdrawals. Other ordinary income means taxable interest and ordinary dividends; capital gains, qualified dividends, tax-exempt interest, wages, Roth distributions and special public or military pension rules need a separate calculation. Disability and survivor eligibility are not assessed by this tool. Age bands represent the listed ages for the full year; midyear eligibility and birth-date exceptions need checking.
Local income taxes are not modeled here, except the approximate statewide-average county rates included when you select Maryland or Indiana.
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 traditional IRA withdrawals | $0 | $0 | $0 |
| $30,000 Social Security, $20,000 private defined-benefit pension, $20,000 traditional IRA withdrawals | $1,415 | $389 | $4,336 |
| $40,000 Social Security, $40,000 private defined-benefit pension, $50,000 traditional IRA withdrawals, $10,000 other income | $6,302 | $4,288 | $19,812 |
Age 67, 2026 rules including the federal senior deduction. For the joint column, income is the household total, both spouses are 67, and each owns 50% of every income category. State estimates apply Vermont's main exclusions and may differ for income-tested credits.
Lower-tax states for the age-67 example
The amounts below use the fixed example above. Comparison links carry the last valid household entered in the calculator, including each spouse's income and age; the destination recalculates that household. Finish correcting invalid entries before using a comparison.
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 private defined-benefit pension, $20,000 traditional IRA withdrawals, 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.