Vermont Small Business Taxes: The Employer’s Complete 2024 Guide

Feli Oliveros

As a state known for its beautiful landscapes and highly educated workforce, Vermont may be ideal for entrepreneurs seeking work-life balance to set up shop. Of course, if you want to own a successful business in the Green Mountain State, you should take time to understand your state tax obligations as well. 

If you plan on starting a small business in Vermont (or if you own one already), here’s what you should know about the state’s taxes.

What business taxes do you pay in Vermont?

The state taxes a business is responsible for depend on factors like its structure, income, employer status, location, industry, and business activities.

In the state of Vermont, companies typically pay income taxes, sales tax, employer taxes, and any industry-specific or local taxes that apply to their business. Let’s look at each of these taxes in greater detail in the following sections. 

Vermont personal income tax

In Vermont, most pass-through entities—which include sole proprietorships, partnerships, limited liability companies (LLCs), and S corporations—don’t pay business taxes per se. The tax obligation gets passed on to their business owners, who pay the taxes on their personal returns at the state’s individual income rates. The state income tax rate in 2024 ranges from 3.35% to 8.75%. 

How to file and pay

Individual income tax returns (Form IN-111) are due on April 15. Taxpayers file and pay income taxes through the Vermont Department of Taxes (DOT) myVTax online portal. Alternatively, you can have a tax professional file on your behalf, or submit your return by mail using the appropriate address on the tax form. 

If your business expects to owe $500 or more in income taxes, you must make quarterly estimated tax payments by the 15th of April, June, September, and January. Make your tax payments through myVTax, or send your payment by mail along with Form IN-114 to the address below: 

Vermont Department of Taxes
PO Box 1779
Montpelier, VT 05601-1779

You can find more information on Vermont’s personal income tax by visiting the DOT website

Vermont business entity income tax

S corporations, partnerships, and LLCs that are taxed as an S corporation or partnership pay a separate business entity tax (BET) in addition to the income taxes their business owners pay. These companies pay a minimum tax of $250 every year. 

Some business entities may need to make estimated income tax payments on behalf of their nonresident partners, shareholders, or members. The state of Vermont assesses a 6.6% tax on each nonresident’s share of the company’s income. These payments then act as credits toward the taxpayer’s individual income tax liability or the company’s composite tax liability.

How to file and pay

Business entity tax returns (Form BI-471) are due on the 15th day of the third month after the end of the tax year. Calendar filers must submit their return and tax payments by March 15. 

Business entities that operate only within the state, have owners who are all residents of Vermont and are only liable for the $250 minimum tax may file a simplified tax return (Form BI-476) instead. 

BET returns must be filed electronically via myVTax or sent by mail to this address:

Vermont Department of Taxes
PO Box 1779
Montpelier, VT 05601-1779

Businesses that must pay estimated income taxes should make these payments by the 15th day of the fourth, sixth, and ninth months of the fiscal year and the 15th day of the first month following the end of the fiscal year. BET estimated tax payments can be submitted through myVTax. However, you can also pay by mail by sending payment along with Form WH-435 to the address below:

Vermont Department of Taxes
133 State Street
Montpelier, VT 05633-1401

You can find more information on the Vermont business entity income tax and BET composite returns on the DOT website

Vermont corporate income tax

C corporations (and LLCs treated like C corporations for tax purposes) that incorporate in Vermont or receive income from Vermont sources must pay corporate income taxes in the state. 

The corporate income tax rate ranges from 6% to 8.5% of a company’s net income, with businesses making $10,000 or more from Vermont sources paying an additional flat fee tax. The Department of Taxes has also instituted a minimum annual tax ranging from $300 to $750 based on a corporation’s Vermont gross receipts. 

How to file and pay

Corporate income tax returns (Form CO-411) are due the same day as the federal corporate income tax return. For most fiscal year filers, this deadline is the 15th day of the fourth month after the end of the year (or April 15 for calendar year filers). 

Note that corporations must file a return each year, even if they have no tax due, if they want to keep their corporate income tax account open. 

Additionally, corporations with an annual tax liability exceeding $500 are required to make estimated tax payments by the 15th day of the fourth, sixth, ninth, and 12th months of the fiscal year.

Corporate tax returns and estimated tax payments can be filed online via myVTax or by mail. Business owners who plan on filing by mail should send their tax forms and payment to the following address:

Vermont Department of Taxes
PO Box 1779
Montpelier, VT 05601-1779

If you’ll be paying your estimated taxes mail as well, send your payment along with voucher Form CO-414 to this address:

Vermont Department of Taxes
133 State Street
Montpelier, VT 05633-1401

Find more information on the Vermont corporate income tax by going to the DOT website

Sales and use tax

If your company sells physical products or certain taxable services, you may be required to collect sales tax at the point of purchase and pay it to the Department of Taxes. Businesses may also be subject to use tax if they buy products or taxable services outside of Vermont for use within the state and haven’t paid Vermont sales tax on the transaction.

The state sales and use tax rate is 6%.

If you’re unsure whether your business should pay Vermont’s sales or use tax, talk with your tax professional or accountant.

How to file and pay

Businesses that collect sales tax in Vermont must register with the state for a business tax account and sales tax license. You can complete this registration online via the myVTax portal. 

You’ll then be assigned a monthly, quarterly, or yearly sales tax filing frequency, depending on your estimated tax liability. Sales tax returns (Form SUT-451) are due on the 25th day after the end of the filing period:

  • Monthly filers pay taxes by the 25th day of the following month
  • Quarterly filers pay taxes by the 25th of the month following the end of the quarter
  • Yearly filers pay taxes on January 25

The state of Vermont recommends that businesses file and pay their sales taxes online through myVTax. Some companies—including those with multiple locations, those with a tax liability exceeding $100,000 in the previous calendar year, and those with sales subject to local option tax (more on this later)—are required to file electronically. 

If you don’t meet any of the above requirements and want to file your returns by mail, send your tax forms to this address: 

Vermont Department of Taxes
Taxpayer Services Division
PO Box 547
Montpelier, VT 05601-0547

Additional information on the Vermont sales and use tax is available on the DOT website

Withholding tax

Employers must withhold a portion of their employee’s wages and pay it to the Department of Taxes if the employee is a resident of Vermont or performs services in the state. These taxes are known as withholding taxes or employment taxes

Out-of-state employers don’t need to collect withholding taxes from employees until they have been working from a location in Vermont for 30 days. However, if an employee lives and works remotely in Vermont, the income they earn for that entire period is subject to the state’s withholding taxes. 

The withholding tax rates differ between employees because this tax is calculated based on factors like the employee’s wages and withholding allowances. In 2024, Vermont’s withholding tax rate ranges from 3.35% to 8.75%.

Use the DOT income tax withholding tables and charts to determine how much to withhold from each employee’s paychecks. 

How to file and pay

Employers must first register for a business withholding tax account through myVTax. Once registration is complete, your company will be assigned a quarterly, monthly, or semi-weekly payment frequency based on your tax liability:

  • Taxes for quarterly payers are due by the 25th day following the end of the calendar quarter
  • Taxes for monthly payers are due by the 25th day of the following month
  • Taxes for semi-weekly payers are due by the Wednesday or Friday following the pay period, depending on when the pay period ends 

The payment frequency you’re assigned will typically be the same as your federal withholding filing frequency. 

Vermont employers have other filing requirements as well. Employers must file Form WHT-436 by the 25th day following the end of each calendar quarter. They’ll also need to file Form WHT-434 along with all Form W-2 and 1099 by January 31 to reconcile their income tax withholding payments. 

Companies should file all withholding tax forms and make all withholding payments through the myVTax online portal. 

Visit the Department of Taxes website for more details on the Vermont withholding tax. 

Unemployment insurance tax

Unemployment insurance (UI) taxes pay for the benefits of eligible workers who must leave the company through no fault of their own. Most Vermont employers make unemployment contributions if they pay at least $1,500 in wages in a calendar quarter or employ at least one worker for at least one day in 20 different weeks of a calendar year. 

Employers pay 0.4% to 5.4% on the first $14,300 of each employee’s wages. New employers are typically assigned a 1% tax rate. 

How to file and pay

Employers must register for an unemployment tax account with the Vermont Department of Labor before they can pay UI taxes. 

Quarterly wage and contribution reports (Form C-101) are due on the last day of the month following the end of each calendar quarter: April 30, July 31, October 31, and January 31. All reports and tax payments should be made electronically through the Vermont Internet Tax and Wage System (VITWS).

Find more information on the Vermont unemployment tax on the Department of Labor website.

Other industry-related and local taxes

In addition to the business taxes levied by the state, cities and counties in Vermont are allowed to assess their own taxes on businesses within their jurisdictions. 

For example, some municipalities charge a 1% local option tax on certain transactions to increase their revenue. Other cities and counties levy business personal property taxes. 

The state of Vermont also charges excise taxes on certain industries, business activities, and products. These include: 

  • Alcoholic beverages
  • Cannabis 
  • Fuel 
  • Health care claims 
  • Insurance premiums
  • Meals and lodging 
  • Solid waste 
  • Tobacco products

A full list of the industry-related taxes assessed in Vermont is available on the Department of Taxes website

Because the taxes described in this section are dependent on a company’s municipality, industry, and business activities, you should talk with your accountant or tax professional to see if any of these taxes apply to your business. Working with a tax advisor can also help ensure your taxes are filed correctly and on time, and that your business takes advantage of all the tax credits and deductions available to you. 

Vermont business tax breakdown by business type

To help you keep track of your state and federal tax obligations, we’ve included a breakdown of the taxes most Vermont businesses can expect to pay. 

Keep in mind that pass-through entities don’t pay federal income taxes at the entity level. Their business owners cover this obligation by paying taxes on their share of the company’s income on their personal returns. 

Business typePersonal income taxBusiness entity income taxCorporate income taxSales and use taxWithholding taxUnemployment taxFederal income taxes
C corporationNo No YesYes, if applicableYes, if you hire employeesYes, if you hire employeesYes
S corporationYes (pass-through)YesNo Yes, if applicableYes, if you hire employeesYes, if you hire employeesYes (pass-through)
LLCDepends on how it’s structuredDepends on how it’s structuredDepends on how it’s structuredYes, if applicableYes, if you hire employeesYes, if you hire employeesYes (pass-through)
Partnership Yes (pass-through)Yes NoYes, if applicableYes, if you hire employeesYes, if you hire employeesYes (pass-through)
Sole proprietorshipYes (pass-through)No NoYes, if applicableYes, if you hire employeesYes, if you hire employeesYes, by way of individual income tax

File your Vermont small business taxes with Gusto

Gusto is here to help. When you run payroll, the platform automatically calculates and files your payroll taxes at no additional cost. And when you’re ready to expand your business, we’ll provide you with the resources you need to register for taxes in additional states. 

Discover why Gusto was named the top payroll software of 2023 by creating an account today. 

Feli Oliveros Feli Oliveros is a freelance finance and business writer with experience covering personal and small business finance. In 2015 she graduated from UCLA, where she earned her bachelor’s degree in English and minored in Anthropology.
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