Vermont · State and Local Tax (SALT) Deduction
State and Local Tax (SALT) Deduction in Vermont (2026)
Deduct combined state income taxes (or sales taxes) and local property taxes up to the 2026 SALT limit. Vermont has a progressive income tax with a top rate of 8.75%, so a Vermont filer's combined marginal rate on the next dollar at $63,477 of income is about 18.6% (12% federal + 6.6% VT).
2026 savings example for Vermont
Planning estimate for a single filer earning $63,477 (Vermont median household income in LevyIO's state dataset) who removes $5,000 from taxable income. Federal tax uses the 2026 IRS brackets after the $16,100 standard deduction; VT tax uses the state brackets in LevyIO's dataset and assumes the state follows the federal treatment.
Estimated total savings
$930
Federal savings
$600
$5,437 → $4,837 · 12% bracket
VT state savings
$330
$2,079 → $1,749 · 6.6% marginal
Combined marginal rate
18.6%
≈ $186 saved per $1,000 deducted
Statutory maximum for this item in LevyIO's dataset: $40,400.
Federal × Vermont marginal rates (2026, single)
Gross-income ranges include the federal standard deduction. The VT column is the state marginal rate at the midpoint of each range. The last column is the tax saved per $1,000 deducted at that combined rate.
| Federal bracket | Gross income (single) | VT marginal | Combined | Per $1,000 |
|---|---|---|---|---|
| 10% | $16,100 - $28,500 | 3.35% | 13.35% | $134 |
| 12% | $28,500 - $66,500 | 3.35% | 15.35% | $154 |
| 22% | $66,500 - $121,800 | 6.6% | 28.6% | $286 |
| 24% | $121,800 - $217,875 | 7.6% | 31.6% | $316 |
| 32% | $217,875 - $272,325 | 7.6% | 39.6% | $396 |
| 35% | $272,325 - $656,700 | 8.75% | 43.75% | $438 |
| 37% | Over $656,700 | 8.75% | 45.75% | $458 |
Eligibility & forms
Taxpayers who pay state income, sales, or property taxes
- Must itemize
- State/local income OR sales tax
- Property taxes on real estate
- $40,400 combined cap for most filers ($20,200 MFS)
Federal forms: Schedule A
Vermont filing notes
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.
Common mistakes: Exceeding the SALT cap; Including foreign taxes here.
Frequently asked questions
How much can the State and Local Tax (SALT) Deduction save a Vermont taxpayer in 2026?
In LevyIO's example, a single filer with $63,477 of income (the Vermont median household income in our state dataset) who removes $5,000 from taxable income saves about $600 in 2026 federal tax (12% marginal bracket) plus about $330 in Vermont tax (6.6% state marginal rate), roughly $930 combined. It is a planning estimate computed from the 2026 IRS brackets and LevyIO's VT bracket data, not a survey figure.
What is the Vermont income tax rate for 2026?
Vermont has a progressive income tax with a top rate of 8.75%. The VT standard deduction in LevyIO's dataset is $7,650 single / $15,300 married. Four brackets to 8.75%. High property taxes (1.83%). Estate tax ($5M). VT business/farm capital gains exclusion.
Who qualifies for the State and Local Tax (SALT) Deduction in Vermont?
Taxpayers who pay state income, sales, or property taxes. The federal rules are the same in every state; the requirements are: Must itemize; State/local income OR sales tax; Property taxes on real estate; $40,400 combined cap for most filers ($20,200 MFS). Vermont filers should confirm on the VT return whether the state follows the federal treatment.
Which forms do I file to claim the State and Local Tax (SALT) Deduction?
Federal: Schedule A. Vermont: check the Vermont Department of Taxes instructions for the matching state schedule. Common mistakes: Exceeding the SALT cap; Including foreign taxes here.
State and Local Tax (SALT) Deduction in other states
- Full State and Local Tax (SALT) Deduction guide (all states)
- State and Local Tax (SALT) Deduction in New York
- State and Local Tax (SALT) Deduction in Alabama
- State and Local Tax (SALT) Deduction in Arkansas
- State and Local Tax (SALT) Deduction in California
- State and Local Tax (SALT) Deduction in Georgia
Sources
Reviewed 2026-09-17. Estimates are educational planning figures computed from the IRS 2026 inflation adjustments and LevyIO's state bracket dataset; they are not tax advice.