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Vermont flag2026Rank #48

Vermont Retirement Taxes

SS partially taxed · retirement income taxed · property 1.51% · sales 6.43%. Plan RMDs, Roth conversions, and estate tax before retiring in Vermont.

By Sammy S. · Founder · AuthorUpdated for 2026

Social SecurityCompare

Vermont retirement taxes snapshot

Still taxes some Social Security above AGI thresholds; other retirement income taxable; estate tax applies. Rank #48 on this site's retiree-friendliness score (#1 is most favorable).

Social Security

SS partially taxed

Federal rules still apply

Retirement income

Retirement income taxed

Pensions / IRA / 401(k)

Estate / inheritance

Estate tax

Exempt ~$5M

Retiree rank

#48

Lower score = more friendly

Compare Vermont with another state

Compare any two states

Social Security, pensions/IRA, estate taxes, and supporting property/sales rates.

Does Vermont tax Social Security?

SS partially taxed

Full SS exemption below AGI $55,000 single / $70,000 joint; partial relief phases out above.

Federally, up to 85% of Social Security can be taxable based on combined income. State treatment is a separate layer on top of IRS rules.

How Vermont taxes pensions, IRA, and 401(k) withdrawals

Retirement income taxed

Other retirement income generally taxed; SS partially taxed above thresholds.

Federal income tax on Social Security and retirement distributions can apply regardless of state rules.

Estate and inheritance taxes in Vermont

Estate tax

Approx. exemption
$5M
Top estate rate
16%

Vermont does not currently levy a state inheritance tax.

Federal estate tax may still apply above about $15M for 2026, regardless of state rules.

Property and sales taxes that affect retirees in Vermont

Income-tax savings can be offset by higher housing or consumption taxes. These are statewide benchmarks—not the exact levy on a specific home or shopping basket.

Federal vs Vermont retirement taxes

Living in Vermont does not remove federal tax on taxable Social Security, traditional IRA/401(k) withdrawals, capital gains, or a taxable estate above the federal exemption. Vermont rules sit on top of IRS rules.

Federal Social Security

Up to 85% of benefits may be taxable based on combined income—same framework in every state.

Vermont Social Security

SS partially taxed

Vermont withdrawals

Retirement income taxed

Death taxes

Estate tax

Before you retire in Vermont

Confirm Social Security treatment

Full SS exemption below AGI $55,000 single / $70,000 joint; partial relief phases out above.

Confirm pension and IRA rules

Other retirement income generally taxed; SS partially taxed above thresholds.

Estimate property tax on your home

Statewide effective property tax is about 1.51%. Check local homestead or senior relief.

Budget for sales tax

Combined average sales tax is about 6.43%. Necessities may be taxed differently.

Review estate or inheritance tax

Estate tax

Plan Roth conversions carefully

Conversions can raise Vermont taxable income and, where relevant, Social Security state-tax thresholds.

How to read the Vermont figures

Retiree rank

#48 on this site’s Social Security, retirement-income, and estate/inheritance score (#1 is most favorable).

Social Security badge

A planning label—not a guarantee for every AGI level or filing status.

Property & sales

Statewide benchmarks for cash-flow planning; your locality may differ.

Not modeled

Every local income tax, circuit breaker, homestead credit, or private pension nuance.

Related retirement planning tools

Social Security calculatorRMD calculatorRoth IRA calculator401(k) match

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Vermont retirement tax FAQs

Full SS exemption below AGI $55,000 single / $70,000 joint; partial relief phases out above.

Other retirement income generally taxed; SS partially taxed above thresholds.

Yes — estate tax with an exemption near $5M and top rate about 16%.

Effective owner-occupied property tax is about 1.51%. Combined average sales tax is about 6.43%.

Vermont ranks #48 on this site's retiree-friendliness score (#1 is most favorable), based on Social Security, retirement-income, and estate/inheritance treatment.

Still taxes some Social Security above AGI thresholds; other retirement income taxable; estate tax applies. Compare property tax, sales tax, healthcare costs, and housing before deciding.

Yes. Federal income tax on taxable Social Security, IRA/401(k) withdrawals, capital gains, and the federal estate tax framework still apply.

Use the pair selector on this page to compare Social Security treatment, retirement-income rules, estate/inheritance indicators, and supporting property and sales rates.

No. Federal taxability of Social Security depends on combined income under IRS rules, not on your state of residence. State tax is an additional layer.

A Roth conversion can increase taxable income in Vermont and may affect Social Security state-tax thresholds where applicable. Model federal and state layers together before converting.

Confirm Social Security treatment, pension/IRA exclusions, property-tax homestead or senior relief, sales-tax rates on necessities, and whether Vermont has an estate or inheritance tax. Local income taxes may also apply.

RMDs from traditional IRAs and 401(k)s are generally treated like other retirement withdrawals in Vermont. Other retirement income generally taxed; SS partially taxed above thresholds.

Confirm current Vermont return instructions and local rules. Rankings are educational planning aids.