Vermont Salary Paycheck Calculator
Vermont is a beautiful place to call home for you and your business. You’ve worked hard to grow your company, and if you’re ready to take it to the next level, that might mean hiring employees. While hiring the right people for your team is important, so is paying them correctly. There’s no shortage of payroll taxes and paycheck rules you’ll need to follow to remain in the good graces of the taxing authorities. Below, we’ve compiled the main federal and state payroll taxes and the Vermont paycheck rules you’ll need to know about as an employer.
Vermont state payroll taxes
Vermont withholding tax
It all starts with employees completing Form W-4VT, Employee’s Withholding Allowance Certificate. They should fill this out when they start working for you, and it will help you calculate the amount of tax to withhold.
With information from Form W-4VT, like filing status and the number of allowances, you’ll use Vermont’s withholding tables or wage bracket charts to compute the withholding.
Paying Vermont withholding tax
Generally, your payment frequency will mirror your federal payment frequency. If you pay your federal payroll taxes semi-weekly, that’s how you’ll pay Vermont.
Paying your withholding tax electronically is mandatory if:
- you’re on a semi-weekly payment frequency,
- you pay more than $100,000 per year, or
- you use a payroll filing service.
Otherwise, you’re encouraged to pay online, but it’s not required.
Quarterly payroll tax returns are due from all employers, regardless of your payment frequency. You’ll use Form WHT-436, Quarterly Withholding Reconciliation, and you can also submit this report online.
All employers will file annual reconciliations on Form WHT-434, Annual Withholding Reconciliation. This form acts as the transmittal of your federal Form W-2, Wage and Tax Statements, and 1099s. It also reconciles the amount of Vermont income tax withheld shown on the W-2 and 1099 with the amounts you reported on your quarterly reports.
Vermont unemployment tax
Vermont charges employers an unemployment tax on the first $15,500 of each employee’s wages each year. This amount, called the wage base, can change.
New employers in Vermont pay the new employer rates until they earn a rating based on their use of the unemployment program. Most new companies will pay a 1% tax rate, but certain construction employers will pay rates between 2.3% and 4%. Experienced employers will pay rates ranging from 0.4% to 8.4%.
Electronic quarterly wage reports and tax payments are due from all employers.
Other Vermont paycheck rules and laws
Don’t forget about these Vermont paycheck rules.
- Salary threshold
- Because the state of Vermont doesn’t have its own salary threshold, it adheres to the federal salary threshold, which is now $684 per week (equivalent to $35,568 per year for a full-year worker). The Department of Labor permits employers to count some bonuses, commissions, and other incentive payments toward meeting the standard salary level (up to 10%). Employees who earn at least $107,432 per year may qualify as “highly compensated.” See this Department of Labor fact sheet for details.
- Final paychecks
- If a worker voluntarily resigns, final wages are due no later than the next regularly scheduled payday.
- For layoffs and involuntary terminations of employment, final wages are due within 72 hours from the last date of employment.
- New hire reporting
- Employers have ten days of the first day an employee works to report them to the state’s directory.
- Workers’ Compensation insurance
- Requirements to obtain Workers’ Compensation vary by state, this table outlines some of these requirements. If you determine that your company is required to purchase Workers’ Compensation insurance in your state, learn how to sign up for this insurance with Gusto. Sometimes, companies get a request for a workers’ comp audit—head to this article and click the workers’ comp audit reports dropdown for more information.
- Earned sick leave
- Most employers must provide one hour of paid sick leave for every 52 hours worked.
Federal payroll taxes
All employers are responsible for withholding and paying applicable federal payroll taxes.
Some taxes are paid by the employee, some by the employer, and some are split between employer and employee.
|Federal Payroll Taxes|
|Paid by Employee||Paid by Employer||Paid by Employee and Employer|
|Federal Income Tax (FIT)|
Additional Medicare Tax
|Federal Unemployment Tax (FUTA)||FICA (Social Security and Medicare)|
Federal Income Tax (FIT)
New employees should complete Form W-4, Employee’s Withholding Certificate, when they start work. There’s no need to send the W-4s to the IRS. Hang on to them in your payroll records.
Unless exempt, all employees will need to have federal income tax withheld from their paycheck. The amount depends on several factors, including wage amount and the number of dependents. With information from Form W-4 and some tax tables, you can calculate how much tax to withhold. However, if you prefer, payroll software can quickly make this calculation for you.
Additional Medicare tax
Some of your employees may have to pay the Additional Medicare tax depending on their total wages and tax filing status. Although you may not know if your employee is responsible for this tax, you must withhold it from any employee earning more than $200,000 per year. The 2022 tax rate for the Additional Medicare tax is 0.9%.
Federal Unemployment Tax (FUTA)
Like the state, the federal government also has an unemployment tax. It’s called FUTA and it’s an annual tax employers pay on the first $7,000 of each employee’s wages. The FUTA rate for 2022 is 6%, but many employers only have to pay 0.6% each year.
Federal Insurance Contributions Act tax (FICA)
The Federal Insurance Contributions Act, or FICA tax, is made up of the Medicare tax and the Social Security tax. In 2022, the Social Security tax requires employers and employees to each contribute 6.2% of wages up to $147,000. The Medicare tax requires each to contribute 1.45% of all wages. See the IRS webpage for details, like maximum thresholds.
When to pay federal payroll taxes
Depending on how much tax you owe, you may have to pay your payroll taxes annually, quarterly, monthly, or semi-weekly.
|Federal Payroll Tax Payment Frequency|
|Monthly or semi-weekly||Quarterly or annually|
|Federal income tax|
|Additional Medicare tax|
The IRS has a helpful guide to further your understanding of federal tax deposits.
How to report federal payroll taxes
Employers will need to file Form 941, Employer’s Quarterly Federal Tax Return, each calendar quarter to reconcile the FICA, federal income tax, and Additional Medicare tax due with what was paid. Any shortfall must be paid, and penalties may be assessed for failure to make timely deposits.
Whether you deposit FUTA tax quarterly or annually, you’ll use Form 940, Employer’s Annual Federal Unemployment (FUTA) Tax Return, to summarize the tax you owe.