How to File
Depending upon your residency status and your own personal situation, you may need additional forms and schedules.
There are three ways to file:
- Purchase software to prepare your taxes or, if eligible, use Free File
- File a paper return
- Use a tax professional or volunteer assistance to prepare and file your return
Vermont income taxes are imposed on individuals and entities (taxpayers) that vary with the profitable income (taxable income) of the taxpayer. Separate taxes, such as Income and Property Tax, are assessed against each taxpayer meeting certain minimum criteria.
Personal Income Tax
Income Tax is imposed on Vermont taxable income, which is defined as the gross income from an individual where standard deductions and other allowances have been subtracted. This Vermont taxable income is the amount of your income that is subject to income tax.
Homestead Declaration
A Homestead Declaration must be filed by every Vermont resident homeowner on their primary residence annually by the April filing deadline. A homestead is the principal dwelling and parcel of land surrounding the dwelling, owned and occupied by the resident as the person’s domicile. If property is not declared a homestead, it will be taxed at the nonhomestead rate. Nonhomestead property is property used for commercial purposes or a second home, camp, summer cottage. All property is considered nonhomestead, unless it is declared as a homestead. It is your responsibility as the property owner to claim the property as a homestead if you meet, or expect to meet, the following requirements:
- You are a Vermont resident
- You own and occupy a homestead as your domicile as of April 1.
Please note: If you meet these requirements, except that your homestead is leased to a tenant on April 1, you may still claim it as a homestead if it is not leased for more than 182 days in the calendar year.
Property Tax
Property Tax is assessed at the municipal level, with real property listed to the April 1 owner of record. Local assessing officials called listers or assessors determine the appraisal value of property. The legislative body of the town (select board or alder board) sets a tax rate to raise money for highways and town expenses. For education funding, all real property is classified as homestead or nonhomestead. A statewide education tax is imposed on these two classes of property at different rates. The basis for this classification is the Homestead Declaration. The homestead education tax rate in each municipality depends upon the local per pupil spending, with rates adjusted by the local common level of appraisal.
Property Tax Credit
Depending on household income, Vermont homeowners may be eligible for a credit against their annual Vermont property tax. A homeowner may be eligible for a credit based on three factors. They must have filed a Homestead Declaration on their property as their principal residence on April 1 of that year, were domiciled in Vermont all of the previous calendar year and were not claimed as a dependent by another taxpayer for the previous tax year.
Renter Rebate Claim
A Renter Rebate is allocated to eligible Vermont homeowners based on the portion of their rent paid that exceeds an established percentage of household income. Renters in Vermont may qualify for a rebate based on their household income and how much property tax they paid through rent on their principal place of residence.
To be eligible for Renter Rebate, you must be a legal resident of Vermont for the entire calendar year, not be claimed as a dependent of another taxpayer, have a household income which does not exceed $47,000, and you are the only person in the household making a renter rebate claim.
Use Tax
This tax requires the payment of tax on taxable purchases where vendors do not collect sales tax, like with purchases made online, from catalogs, and in another state to be brought home.
Out of state vendors are not required by law to collect the Vermont Sales tax if they have no physical presence in Vermont, but tax on the sale is still due. To pay the Vermont Use tax, record your taxable purchases and submit your payment when filing your Form IN-111, Vermont Income Tax Return. If you do not file a Vermont Income tax form but your purchase is delivered to Vermont, you can fill out Form SU-452, Vermont Use Tax Return.