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by Dave Soulia, for FYIVT.com
On paper, Vermont’s tax burden appears moderate: according to the Institute on Taxation and Economic Policy (ITEP), the combined state and local tax burden ranges from 6.3% for the wealthiest households to 10.6% for the lowest-income earners. But when actual Vermonters break down their paychecks and monthly bills, the numbers often feel much higher—sometimes pushing into the 30–40% range before factoring in basic living costs like housing, fuel, and food.
A closer look at the real-world costs reveals why.
Start with Income Taxes—But Don’t Stop There
For a household earning Vermont’s median income of $81,200, federal income taxes alone take a 12%–22% bite depending on deductions. Payroll taxes (Social Security and Medicare) strip away another 7.65%. State income taxes, based on Vermont’s progressive brackets, typically remove 6–8% more. When combined, a typical middle-class earner might see 24% or more of gross income gone before ever touching their paycheck.
But that’s only the beginning.
Property Taxes: The Silent Pillar
Homeowners in Vermont pay some of the highest property taxes in the nation. According to the state’s Fiscal Facts 2025 report, the Education Fund—funded largely by property tax—makes up more than 26% of total state revenue, with nearly $2 billion raised through property taxes annually. For a modest $250,000 home, it’s common to see $5,000 to $7,000 in annual property tax bills, or another 6–8% of income.
For renters, property taxes are baked into rent—landlords pass those costs along, often silently.
Fees, Licenses, Surcharges, and the Cost of Existing
Vermont’s budget isn’t built solely on traditional taxes. The “other revenues” section of the Joint Fiscal Office (JFO) reports adds up quickly: vehicle registrations, hunting and fishing licenses, septic permits, dog licenses, emissions inspections, snowmobile tags, and more. Utilities tack on surcharges for energy efficiency and telecom services. Fuel oil is taxed. Even broadband service includes layered fees and state universal service charges.
It’s easy to underestimate the burden here—but when combined, these often mandatory outlays can add another $1,000–$3,000 annually per household. Add in Vermont’s 6% sales tax on most goods (plus local option taxes in some cities), and the total government take creeps ever higher.
So How Much Do Vermonters Really Pay?
The Economic Review and Revenue Forecast Update estimates total state spending in Vermont at $8.7 billion in FY2024. Divide that by Vermont’s ~645,000 residents, and the cost per capita is about $13,500. But that includes children and others who pay little or nothing in direct taxes.
Based on the ITEP and Census data, roughly 400,000 Vermonters are taxpaying adults. When that denominator is applied instead, the per-adult cost of Vermont government climbs to about $21,750 per person.
Not every Vermonter pays that much—some contribute little, others bear far more. But across income brackets, the message is clear: the real feel of Vermont’s tax burden is significantly higher than the state’s official rate sheets suggest.
How Vermont Compares
Compared to large, urbanized states like California, New York, or Texas, Vermont lacks a deep corporate tax base. It doesn’t have Fortune 500 headquarters or sprawling oil fields. As a result, the tax load falls more heavily on individuals, especially the middle class.
Per Urban Institute data, Vermont ranks among the top 5 states in per-capita state and local spending, rivaling places with far greater economies of scale. In raw terms, Vermont spends more per person than dozens of metro areas with populations above 650,000, despite being a rural state with relatively limited industry.
When Do Taxes Break Households?
A 2022 Harvard Joint Center for Housing Studies report reaffirmed the federal government’s “30% housing burden” rule, meaning no more than 30% of income should go to housing. But that 30% is typically calculated off gross income, not post-tax income. In a place like Vermont—where taxes and fees may consume 30–40% of household income—hitting both the tax burden and the housing affordability threshold is rare.
“People are tapped out before they’ve paid their rent or bought groceries,” one Barre resident told FYIVT. “The paycheck disappears before it even hits the account.”
Conclusion: A Disconnect Between Paper and Pocketbook
While Vermont officials cite tax fairness and progressive rates, the lived experience of many Vermonters tells a more complicated story. After subtracting income, payroll, and property taxes, then layering in vehicle, energy, and communications fees, the effective take-home income may be less than 60% of gross pay. And that’s before housing, healthcare, childcare, or savings.
Whether one views that as a moral commitment to public goods—or an unsustainable burden—depends on politics and priorities. But by any honest arithmetic, the real-feel tax burden in Vermont is not 7–11%. It’s more like 30–40%, and climbing.
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Categories: Commentary, Taxes
Well said Dave, thank you for the research. Thanks to the Far Left Vermont State Government for trying to keep up in ridiculousness with the extremely large and populous of New York, California and Illinois to a minimum without taking into consideration we are a tiny State with a tiny population and no huge businesses. Seems they are almost at their self fulfilling prophecy of 100% taxation to take care of dolling out 100% of what ‘they’ feel is your necessity while begging DC for more money to put into their own and friends pockets.
The state of Vermont’s tax motto is, the beatings will stop when the morale improves.
The Commicrat voters and or the Commicrat representatives keep voting for this.
1. It seems they are blind.
2. Their respective heads are in the wrong location.
3. They don’t care.
4. They call this state and country a democracy… heads up, the word democracy is NOT in the Constitution. We are a Republic. The democracy they have created is communism. The state house collectively is the oligarchy from my perspective.
I’m not interested their “cake”.
I’m not interested in paying for their “cake” either.
There is a paragraph herein basically highlighting for reference some basic taxable items. Another burden is having a tax preparer make out and file the tax forms to the IRS & Vt Tax Dept. The forms are so complicated, some times 10 tax preparers will have 10 different completed forms. And they aren’t cheap maybe in the $100 / hr range. A few years ago, a lawyer charged me $190, now it’s much higher. How many pages of IRS forms and instructions are there now—4000?
If NH can survive without an income and sales tax, why not VT? Mainly because controlling peoples money the people can be controlled. If you check the real data as mentioned herein, there are over 140 various taxes realized against the citizen. Add up the taxes just to get your vehicle on the road, and this is a free country—not if you didn’t pay your taxes. In fact with property taxes, that transferred ownership of your property to the town and state, you only have title to rent from the town. Can’t pay the rent, be homeless.
In Alabama if having property and over 65, there’s no property tax, hence the town won’t take your property via taxation. People should delve into the history of property ownership and with data can tell the town to pound grass. I have a huge file about this and actual cases.
Liberals love money.
“For renters, property taxes are baked into rent—landlords pass those costs along, often silently.”
Property tax is a part of the cost of owning the property. Of course the rent reflects that! “… often silently” suggests something nefarious about this.
Are you thinking renters should be told what expenses their rent covers? (Well, I suppose that would open the eyes if those who rent, but I doubt that’s the point of the author.) That slip made me smile.
As a percent of income Vermont has the HIGHEST property taxes of all 50 states, and 75% of property tax bills are education taxes.
Education taxes paid via property tax bills are only one of three ways Vermonters pay for public school education.
The other 2 are:
(1) sales taxes (100% of the $600 million in sales taxes in 2024 went into the Education Fund) and
(2) the teachers pension fund, VSTRS, which is so underfunded that this year the state will transfer $230 million dollars from the General Fund (has resident income taxes) to VSTRS so the pension fund can meets its obligations.
These transfers will continue through at least 2038!.
For all of the ~$2.4 billion dollars Vermont spends on public school education rankings of Vermont compared to the other 49 states on NAEP (Nation’s report card) national standardized tests in 2024 in 4th and 8th grade math and reading were:
#34, 18, 32, and 24 (Mass. was #1 in all 4 categories with #1 being the best)
In 2024 Vermont spent about $27,000 per pupil while Utah spent about $10,000 per pupil and Utah’s ranking on the same tests were: 4, 3, 7, and 8!
Wallet Hub recently ranked Vermont #21 as “best” state to live in with its affordability ranking at #42 (only 8 states were worse)!
All of the above represents a truly terrible return on investment (ROI), but the greater tragedy is at local and statewide levels no one wants to talk about an educational system failing a high percentage of students, and paid for with a crushing economic cost to residents.
I’ve paid my property taxes for over 50 years and never hid a kid in school. Never really complained until I see what kind of education my tax money is buying over the past few years. Now, it’s taking an increasing bite from my social security check which is NOT keeping up!!
Communism continues until other peoples money runs out.
This data means absolutely nothing to Vermont’s 3 congressional representatives – Balint, Bernie & Welch – because millionaires don’t sweat the small stuff ….
Totally agree, Bernie just cosponsored a Bill to block investigations into Social Security fraud, with a catchy title that make it appear it is protecting the money pool, a day after President Trump announced 275,000 illegal aliens receiving Social Security benefits illegally have been removed from rolls.
In all the years of paying into SS (confiscated money), Sanders doesn’t anyone to get any interest on that money that is “for your retirement”. He wants free money to spend and he’s spending your retirement. People that died before receiving any of their money, goes into the “locked box”. People keep voting for this fool when he is robbing them blind. Balint and Welch, are just as bad if not worse. Must be the Shadow Government in control.
And to think, when on SS and had a part time job to survive, Bernie and his government partners withhold about half of what you would receive, because you make too much. They want to keep people in poverty. They control the money and you. There’s too many negative words to describe these people. If I did, this would be deleted. They are anti-human.