$LevyIO

Health Coverage Tax Credit (HCTC) in Vermont 2026

Calculate your health coverage tax credit (hctc) 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

Health Coverage Tax Credit (HCTC) 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

Trade-displaced workers receiving TAA benefits and PBGC pension recipients

  • 1Must receive Trade Adjustment Assistance
  • 2Or be a PBGC pension recipient aged 55-64
  • 3Covers 72.5% of qualified health insurance premiums

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

  • !Not filing monthly with the IRS for advance payments
  • !Missing open enrollment periods
  • !Not keeping proof of qualifying coverage
  • !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 8885Form 1040

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

Other Tax Deductions in Vermont

Medical & Dental Expenses

Medical

~$3,900
est. savings

Self-Employed Health Insurance

Medical

~$6,500
est. savings

HSA Contribution Deduction

Medical

~$2,340
est. savings

Long-Term Care Insurance

Medical

~$2,600
est. savings

Medical Travel Expenses

Medical

~$1,040
est. savings

Flexible Spending Account (FSA)

Medical

~$1,170
est. savings

Medical Equipment & Devices

Medical

~$1,950
est. savings

Therapy & Counseling

Medical

~$2,600
est. savings

Health Coverage Tax Credit (HCTC) in Neighboring States

New Hampshire

No state income tax

~$3,200
-1,800 vs Vermont

Massachusetts

5% top rate (flat)

~$3,200
-1,800 vs Vermont

New York

10.9% top rate (progressive)

~$3,200
-1,800 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 Health Coverage Tax Credit (HCTC) Guide

Frequently Asked Questions

How much can I save with the Health Coverage Tax Credit (HCTC) in Vermont?

In Vermont, the health coverage tax credit (hctc) 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 $3,200/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 Health Coverage Tax Credit (HCTC) in Vermont?

Trade-displaced workers receiving TAA benefits and PBGC pension recipients. 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 Health Coverage Tax Credit (HCTC) in Vermont?

To claim the health coverage tax credit (hctc), you need to file Form 8885 and Form 1040 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 Health Coverage Tax Credit (HCTC) 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

Medical & Dental Expenses in Vermont

Avg savings: $3,000/year

Self-Employed Health Insurance in Vermont

Avg savings: $5,000/year

HSA Contribution Deduction in Vermont

Avg savings: $1,800/year

Long-Term Care Insurance in Vermont

Avg savings: $2,000/year

Medical Travel Expenses in Vermont

Avg savings: $800/year

Flexible Spending Account (FSA) in Vermont

Avg savings: $900/year