State retirement taxes · 2026
Does Vermont tax retirement income?
Short answer: Partly. Social Security is fully exempt up to $55,000 of AGI ($70,000 joint), partly exempt up to $65,000 ($80,000 joint), and taxed above that. No pension or IRA exclusion, apart from $10,000 of a CSRS or non-Social-Security public pension at moderate incomes.
AGI is the adjusted gross income on your federal tax return.
What’s taxed in Vermont
2026 rules. AGI means the adjusted gross income on your federal return.
- Social SecurityPartly taxed
- Social Security is fully exempt up to $55,000 of AGI ($70,000 joint), partly exempt up to $65,000 ($80,000 joint), and taxed above that.
- PensionsTaxed
- Private pensions and most public pensions are fully taxable; up to $10,000 of a CSRS or non-Social-Security public pension can be excluded instead of the Social Security exclusion.
- IRA & 401(k) withdrawalsTaxed
- IRA and 401(k) withdrawals are fully taxable.
- Military retirement payPartly taxed
- Military retirement and survivor benefit income is fully excluded at federal AGI of $125,000 or less, partly excluded up to $175,000, and taxed above that (any filing status).
- Income tax rate8.75% top
- Four brackets for 2026: 3.35%, 6.6%, 7.6% and 8.75%.
Does Vermont tax Social Security?
Social Security is fully exempt up to $55,000 of AGI ($70,000 joint), partly exempt up to $65,000 ($80,000 joint), and taxed above that.
Single, separate, head of household and surviving spouse filers: fully excluded at federal AGI of $55,000 or less, partly between $55,000 and $65,000, not at all at $65,000 or more. Joint filers: fully excluded at $70,000 or less, partly between $70,000 and $80,000, not at all at $80,000 or more. The partial amount is your taxable benefits × (upper limit − AGI) ÷ $10,000. These limits are not indexed. You must choose only one of the Social Security, CSRS or non-Social-Security public pension exclusions; the military exclusion can be added on top.
Your federal return is a separate question — see how much of your benefit the IRS taxes with the taxable Social Security calculator.
Are pensions taxed in Vermont?
Private pensions and most public pensions are fully taxable; up to $10,000 of a CSRS or non-Social-Security public pension can be excluded instead of the Social Security exclusion.
The first $10,000 of Civil Service Retirement System income, or of other federal, state or local contributory pensions from work not covered by Social Security, is excluded under the same AGI phase-out ($55,000–$65,000 single, $70,000–$80,000 joint), in place of the Social Security exclusion. Railroad Retirement is exempt.
Public vs. private pensions: Private pensions: taxed. CSRS and other non-Social-Security public pensions: $10,000 exclusion at moderate incomes.
Are IRA and 401(k) withdrawals taxed in Vermont?
IRA and 401(k) withdrawals are fully taxable.
Vermont has no IRA or 401(k) exclusion.
Required minimum distributions (RMDs) are IRA and 401(k) withdrawals, so the same rules apply. Estimate your RMD.
Is military retirement pay taxed in Vermont?
Military retirement and survivor benefit income is fully excluded at federal AGI of $125,000 or less, partly excluded up to $175,000, and taxed above that (any filing status).
What is Vermont’s income tax rate?
4 brackets, topping out at 8.75%.
Four brackets for 2026: 3.35%, 6.6%, 7.6% and 8.75%. The 6.6% rate starts at $50,750 single ($84,700 joint); 8.75% applies above $256,300 ($312,050 joint).
2026 brackets. Each rate applies to taxable income above the amount shown.
| Single | Married, joint | Rate |
|---|---|---|
| $0 | $0 | 3.35% |
| $50,750 | $84,700 | 6.6% |
| $122,850 | $204,750 | 7.6% |
| $256,300 | $312,050 | 8.75% |
The Vermont Department of Taxes labels the 2026 brackets preliminary.
Standard deduction and exemptions
2025 standard deduction: $7,650 single or separate, $11,450 head of household, $15,300 joint, plus $1,250 per 65+/blind box. Personal exemption: $5,300 (2025). The 2026 amounts are not yet published.
What tax breaks do seniors get in Vermont?
The extra $1,250 standard deduction at 65+, and the Social Security, CSRS and military exclusions. Act 169 of 2026 raises the homestead property tax credit — income limit $47,000 to $50,000 and maximum state credit $5,600 to $6,000 — for claims filed from 2027.
What changed for 2026?
Act 71 (2025) raised the Social Security and CSRS limits by $5,000 and added the military exclusion from 2025. The 2026 session (Act 164) updated federal conformity with no change to retirement exclusions or rates; Act 169 expands property tax and renter credits for 2027 claims.
The 2026 rate schedule is labeled preliminary by the Department of Taxes; exclusion limits are set in law.
What we couldn’t confirm
- Vermont’s 2026 rate schedule is preliminary, and its 2026 standard deduction and exemption amounts aren’t published yet; we show 2025 amounts.
How Vermont compares with its neighbors
Thinking of moving across the line? Here’s how each bordering state treats retirement income in 2026.
- VermontThis pageLess friendlySocial Security Partly taxedTop rate: 8.75% top
- MassachusettsFriendlySocial Security Not taxedTop rate: 9% top
- New HampshireTax-free retirement incomeSocial Security Not taxedTop rate: None
- New YorkVery friendlySocial Security Not taxedTop rate: 10.9% top
State tax is half the picture — check the federal side
Vermont retirement tax questions
Is Vermont tax-friendly for retirees?
We rate Vermont “Less friendly” for 2026. Social Security is fully exempt up to $55,000 of AGI ($70,000 joint), partly exempt up to $65,000 ($80,000 joint), and taxed above that. No pension or IRA exclusion, apart from $10,000 of a CSRS or non-Social-Security public pension at moderate incomes. The top income tax rate is 8.75%.
Are required minimum distributions (RMDs) taxed in Vermont?
RMDs are withdrawals from IRAs and 401(k)-type plans, so they follow Vermont’s rules for those accounts. IRA and 401(k) withdrawals are fully taxable.
Is military retirement pay taxed in Vermont?
Partly. Military retirement and survivor benefit income is fully excluded at federal AGI of $125,000 or less, partly excluded up to $175,000, and taxed above that (any filing status).
What is Vermont’s income tax rate for 2026?
Four brackets for 2026: 3.35%, 6.6%, 7.6% and 8.75%. The 6.6% rate starts at $50,750 single ($84,700 joint); 8.75% applies above $256,300 ($312,050 joint).
Sources for Vermont
Primary sources only. We re-check them whenever an agency publishes new figures.
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