Paige Smith | Published May 19, 2025 3 Min
Vermont may be one of the smallest states in the country, but it delivers on business resources. The Green Mountain State has a variety of business tax credits, tax exemptions, and cash incentive programs designed to support operations at every stage of growth.
Check out the options below to see what you might qualify for.
Vermont business tax credits and incentives
Investment tax credits
Charitable Housing Investment Tax Credit
Vermont’s Charitable Housing Investment Tax Credit, administered by the Vermont Community Loan Fund, is available to corporations that invest in one of the state’s eligible affordable housing organizations.
The amount of credit is the difference between the net income the company would have earned at the charitable threshold rate during the taxable year and the actual net income the company received from its charitable investment in a housing organization. The credit maxes out at 3% of the average outstanding principal balance of the investment. Learn more about the credit here.
Investment Tax Credit
Vermont’s Investment Tax Credit encourages businesses to invest in rehabilitation, energy, advanced coal, gasification, and advanced energy projects. To qualify for the Vermont credit, businesses need to first qualify for the federal Investment Tax Credit.
Eligible businesses can get a credit equal to 24% of the Vermont-property portion of their investment. Get more details here.
Hiring incentives
Vermont Employment Growth Incentive
The Vermont Employment Growth Incentive (VEGI) is a cash incentive program that encourages Vermont businesses to create new jobs and invest significant capital in growth projects.
To qualify for the incentive, Vermont businesses need to create a certain number of full-time jobs that pay 140–160% of the Vermont minimum wage, offer health insurance benefits, and meet performance milestones.
Learn more about the program here.
Related: Find out which steps to take to hire employees in Vermont and keep up with state labor laws.
General business tax credits
Vermont Research and Development Tax Credit
Vermont businesses that qualify for the federal Research and Development (R&D) tax credit can also apply for the state’s R&D credit. Businesses that engage in qualified research activities can get a credit equal to 27% of the federal tax credit they’ve been granted.
Eligible research activities must be:
- Technological in nature
- Used to improve the functionality, performance, reliability, or quality of a new or existing business component
- Used to gather information that will help eliminate uncertainty around the development of a product
- Involve a process of experimentation, such as testing or modeling
Find out how to claim the credit here.
State Downtown and Village Center Tax Credits
Vermont’s State Downtown and Village Center Tax Credits are available to businesses in designated areas that rehabilitate or renovate their commercial properties. The credit amount is equal to 10–50% of a business’s eligible expenses to rehabilitate a property, make exterior improvements, or bring their property up to code.
To qualify for the credit, businesses must meet the following criteria:
- Buildings must be over 30 years old
- Projects must be within a designated downtown, village center, or neighborhood development area
- Projects must cost at least $5,000
Learn how to get your project approved for the credit here.
Vermont business tax exemptions
Vermont offers a handful of sales and use tax exemptions on specific business purchases, including:
- Agricultural fertilizers, pesticides, and machinery and equipment
- Fuel and electricity
- Manufacturing, publishing, packaging, and research and development
- Registrable motor vehicles other than cars and trucks
- Forestry and wood products machinery, equipment, and repair parts
See the whole list here.
Vermont city and county tax credits
Business tax credits aren’t just available at the federal and state levels—some cities and counties in Vermont have their own tax credit programs for local operations. Find your city’s website here to review your options.
Business financing in Vermont
If you need capital to drive your business forward—or flexible credit to keep it afloat in tough times—it’s crucial to review all your resources, starting with state programs. Check out Gusto’s super comprehensive guide to grants and loans in the Green Mountain State to see what you might qualify for.
