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Foreign Tax Credit (Investments) in Vermont 2026

Calculate your foreign tax credit (investments) tax savings in Vermont. With Vermont's 8.75% top state tax rate, your combined savings are higher.

Vermont Tax Overview

State Income Tax
8.75%
progressive
Sales Tax
6%
avg combined: 6.24%
Property Tax Rate
1.83%
Median Income
$63,477

Four brackets to 8.75%. High property taxes (1.83%). Estate tax ($5M). VT business/farm capital gains exclusion.

Vermont Income Tax Brackets (Single)

3.35%
$0 - $45,400
6.6%
$45,400 - $110,050
Your bracket
7.6%
$110,050 - $229,550
8.75%
$229,550 +
$5,000
Est. Total Savings
No Limit
Max Deduction
Tax Credit
Deduction Type
28.6%
Combined Tax Rate

Foreign Tax Credit (Investments) Savings Calculator for Vermont

$
$

Federal Savings

$5,000

22% bracket

Vermont State

$0

6.6% rate

Total Savings

$5,000

28.6% combined

Tax credits reduce your tax bill dollar-for-dollar, regardless of your tax bracket.

Savings by Tax Bracket in Vermont

10%
$5,000
12%
$5,000
22%
$5,000
24%
$5,000
32%
$5,000
35%
$5,000
37%
$5,000

Includes 6.6% Vermont state tax on top of federal savings.

Eligibility Requirements

Investors paying foreign taxes on international investments

  • 1Foreign taxes paid
  • 2Credit or deduction choice
  • 3Form 1116 for over $300

Vermont residents should verify that this deduction is also recognized on their state tax return for additional savings of up to 8.75%.

Common Mistakes to Avoid

  • !Taking deduction instead of credit
  • !Missing foreign tax on 1099
  • !Forgetting to claim the deduction on your Vermont state return (missing up to 8.75% additional savings)

Vermont Filing Tips

High rates make pre-tax contributions important. Use 40% capital gains exclusion on VT business/farm sales. EITC at 38% of federal. Homeowner and Renter Rebate programs offset property taxes.

Required Tax Forms

Form 1116Form 1099-DIV

File these forms with your federal tax return to claim the foreign tax credit (investments). Vermont may require additional state-specific forms.

Other Tax Deductions in Vermont

Capital Loss Deduction

Investment

~$858
est. savings

Tax-Loss Harvesting

Investment

~$6,500
est. savings

Investment Interest Expense

Investment

~$1,950
est. savings

Qualified Dividend Tax Rate

Investment

~$3,900
est. savings

Opportunity Zone Investment

Investment

~$13,000
est. savings

1031 Like-Kind Exchange

Investment

~$39,000
est. savings

QSBS Exclusion (Section 1202)

Investment

~$130,000
est. savings

Installment Sale

Investment

~$10,400
est. savings

Foreign Tax Credit (Investments) in Neighboring States

New Hampshire

No state income tax

~$800
-4,200 vs Vermont

Massachusetts

5% top rate (flat)

~$800
-4,200 vs Vermont

New York

10.9% top rate (progressive)

~$800
-4,200 vs Vermont

Calculate Your Full Tax Savings in Vermont

Use our free tax calculators to optimize your entire tax return for Vermont.

Income Tax CalculatorVermont Income TaxFull Foreign Tax Credit (Investments) Guide

Frequently Asked Questions

How much can I save with the Foreign Tax Credit (Investments) in Vermont?

In Vermont, the foreign tax credit (investments) can save you an estimated $5,000 per year on a $5,000 deduction. This includes $5,000 in federal tax savings and $0 in Vermont state tax savings at the 6.6% marginal rate. The national average savings is $800/year.

What is the Vermont state income tax rate?

Vermont has a progressive income tax system with a top rate of 8.75%. Four brackets to 8.75%. High property taxes (1.83%). Estate tax ($5M). VT business/farm capital gains exclusion.

Who qualifies for the Foreign Tax Credit (Investments) in Vermont?

Investors paying foreign taxes on international investments. The eligibility requirements are the same whether you live in Vermont or another state, as this is a federal tax credit. However, your total savings will vary based on Vermont's 8.75% top state tax rate.

What tax forms do I need to claim the Foreign Tax Credit (Investments) in Vermont?

To claim the foreign tax credit (investments), you need to file Form 1116 and Form 1099-DIV with your federal return. Vermont residents should also check if the state allows this deduction on their state return for additional savings of up to 8.75%. Filing status affects your deduction limits and tax bracket.

Is the Foreign Tax Credit (Investments) better in Vermont than in states without income tax?

Yes, Vermont residents benefit more because the state's 8.75% top income tax rate means the deduction reduces both your federal AND state tax liability. In states with no income tax (like Texas, Florida, or Nevada), this deduction only reduces federal taxes. Your combined rate of 28.6% means more savings per dollar deducted.

What is the standard deduction in Vermont for 2026?

Vermont's standard deduction is $7,000 for single filers and $14,050 for married filing jointly. High rates make pre-tax contributions important. Use 40% capital gains exclusion on VT business/farm sales. EITC at 38% of federal. Homeowner and Renter Rebate programs offset property taxes.

Related Calculators

Capital Loss Deduction in Vermont

Avg savings: $660/year

Tax-Loss Harvesting in Vermont

Avg savings: $5,000/year

Investment Interest Expense in Vermont

Avg savings: $1,500/year

Qualified Dividend Tax Rate in Vermont

Avg savings: $3,000/year

Opportunity Zone Investment in Vermont

Avg savings: $10,000/year

1031 Like-Kind Exchange in Vermont

Avg savings: $30,000/year