See federal withholding, FICA, the graduated Vermont state tax after your W-4VT allowances, and the Child Care Contribution share for any pay frequency.
Vermont payroll taxes stack federal taxes with a graduated state income tax and a small, employer-optional Child Care Contribution line. Every Vermont paycheck has federal Social Security (6.2%), Medicare (1.45%), federal income tax withholding, and Vermont income tax withheld from the 2026 GB-1210 percentage method tables after subtracting $5,400 a year for each Form W-4VT allowance. Vermont income tax runs on a 3.35% to 8.75% graduated schedule with separate single and married tables. Employers pay a 0.44% Child Care Contribution and may deduct up to 0.11% of wages from workers. There is no local wage tax and no employee unemployment contribution; employers pay unemployment on the first $15,400 of each worker's wages for 2026.
- Vermont income tax is graduated. The 2026 withholding tables use 3.35%, 6.6%, 7.6%, and 8.75%, applied to wages after Form W-4VT allowances, with a single table and a married table for each pay frequency.
- Each W-4VT allowance removes $5,400 of annual wages for 2026: $103.85 weekly, $207.69 biweekly, $225.00 semi-monthly, or $450.00 monthly.
- Form W-4VT, not the federal W-4, sets Vermont status and allowances. The Vermont Department of Taxes strongly recommends employers require it, because federal W-4 information can under-withhold.
- The Child Care Contribution is a 0.44% employer payroll tax that began July 1, 2024. Employers may deduct up to 0.11% of wages from employees, with no wage cap, and report it in Box 14 of the W-2.
- Vermont ties extra and supplemental withholding to the federal figure: 30% of extra federal withholding, and 30% of federal withholding as an estimate for non-periodic payments.
- There is no local city or county wage tax anywhere in Vermont. Some towns add a 1% local option tax on sales, meals, alcohol, or rooms, which is never withheld from pay.
- Vermont has no employee-paid unemployment tax. Unemployment is funded by employers on the first $15,400 of wages for 2026.
What Makes Vermont Payroll Different
Federal payroll tax is the same in every state. What changes from one state to the next is the second layer: state income tax withholding, employer unemployment taxes, any local wage taxes, and any state social-insurance premiums. Vermont's second layer has two features. The income tax is graduated and withheld from a separate percentage table for each pay frequency, after a fixed allowance per Form W-4VT, and Vermont now funds child care through a payroll contribution that employers may partly pass to workers.
Vermont publishes its withholding as per-period tables rather than an annualizing formula: an employer paying biweekly uses the biweekly table, subtracts $207.69 for each allowance, and reads the tax from the single or married column. There is no local wage tax, and the only Vermont line beyond income tax is the Child Care Contribution share, if the employer deducts it. The federal baseline behind all of this is explained in the how payroll taxes work guide.
Employee Withholding Overview in Vermont
A Vermont employee sees federal taxes, a graduated state income tax, and possibly the Child Care Contribution share. There is no employee unemployment line and no local wage line.
| Deduction | Who Pays | Rate (2026) | Wage Cap |
|---|---|---|---|
| Social Security (federal) | Employee + Employer | 6.2% | $184,500 |
| Medicare (federal) | Employee + Employer | 1.45% | None |
| Additional Medicare (federal) | Employee only | 0.9% | Wages over $200K ($250K MFJ) |
| Federal income tax withholding | Employee only | Varies (W-4) | None |
| Vermont state income tax | Employee only | 3.35%–8.75% | None (after W-4VT allowances) |
| Child Care Contribution | Employer (may pass up to 0.11%) | 0.44% total | None |
| Local / city wage tax | Nobody | None | — |
| Employee unemployment | Nobody | None | — |
The federal lines work identically to any other state. For Social Security, the 2026 wage base is $184,500, after which Social Security stops for the year. Medicare has no cap, and neither does the Child Care Contribution. What is unique to Vermont is a graduated state income tax read from per-period tables after a fixed allowance, plus the optional Child Care Contribution share.
How Is Vermont State Income Tax Withheld?
Vermont uses the percentage method tables in GB-1210, the Vermont Department of Taxes 2026 Income Tax Withholding Instructions, Tables, and Charts, effective January 1, 2026. The employer picks the table for the pay frequency, multiplies the value of one allowance by the number claimed on Form W-4VT, subtracts it from the period's wages, and applies the single or married table. Head of household files as single on the W-4VT and gets an extra allowance instead of a separate table. The 2026 annual tables below show the full rate structure.
| Annual wages after allowances (single) | Withholding |
|---|---|
| $0 to $3,925 | $0 |
| $3,925 to $54,675 | 3.35% over $3,925 |
| $54,675 to $126,775 | $1,700.13 + 6.60% over $54,675 |
| $126,775 to $260,225 | $6,458.73 + 7.60% over $126,775 |
| Over $260,225 | $16,600.93 + 8.75% over $260,225 |
The married table uses the same four rates on wider bands: 3.35% over $11,775, $2,837.45 + 6.60% over $96,475, $10,760.75 + 7.60% over $216,525, and $18,915.55 + 8.75% over $323,825. Civil union partners use the married table. Employers can also use the wage-bracket charts in the same booklet. The booklet's worked example, $1,800 weekly, married, two allowances, gives $45.77, and the Vermont paycheck calculator reproduces it to the cent. Your final Vermont income tax is settled on Form IN-111. The federal Form W-4 sets federal withholding, covered in the W-4 withholding explained guide, while Form W-4VT sets the Vermont status and allowances.
Form W-4VT and Vermont Withholding Allowances
Form W-4VT, the Vermont Employee's Withholding Allowance Certificate, is Vermont's own version of the W-4. GB-1210 says an employer may use federal W-4 information if no Vermont form is submitted, but warns that not enough tax may be withheld, and the Department strongly recommends that employers require every employee to complete or update a W-4VT.
| Item | Value |
|---|---|
| Line 1: yourself, if no one can claim you | 1 allowance |
| Line 2: filing jointly and spouse does not work | 1 allowance |
| Line 3: each dependent you will claim | 1 allowance each |
| Line 4: filing as head of household | 1 allowance |
| Value of one allowance (2026) | $5,400 a year; $207.69 biweekly |
| Line 6: additional amount per check | Any amount |
The W-4VT offers four status boxes: Single; Married/Civil Union Filing Jointly; Married/Civil Union Filing Separately; and Married, but withhold at higher single rate. GB-1210 publishes only a single and a married table, so the joint status uses the married table and the higher-single-rate election uses the single table; confirm with payroll which table applies to the separate-filing box. Two practical points from the form: only one spouse should claim the dependents, and a worker with more than one employer should consider claiming zero allowances at the lower-paying job.
The Vermont Child Care Contribution
Act 76 of 2023 created the Child Care Contribution to fund Vermont's child care system. Since July 1, 2024, employers pay 0.44% of wages that are subject to Vermont income tax withholding, and self-employed individuals pay 0.11% of Vermont self-employment income.
| Who | Rate | Notes |
|---|---|---|
| Employer, total | 0.44% | On all wages subject to Vermont withholding, no cap |
| Employee share (employer's choice) | 0% to 0.11% | At most one-quarter of the 0.44%; reported in W-2 Box 14 |
| Self-employed | 0.11% | Paid with the Vermont income tax return |
The employee share is entirely the employer's decision. GB-1326 says an employer may withhold up to one-quarter of the contribution, a smaller portion, or nothing, and need not withhold the same amount from every employee. On a $65,000 salary the maximum employee share is $71.50 a year, or $2.75 per biweekly check. Employees have no filing requirement. Wages for work physically performed outside Vermont are not subject to the contribution. The Vermont paycheck calculator deducts the 0.11% maximum by default and lets you switch it off.
Nonresidents, Commuters, and Multi-State Work
Vermont withholding applies to wages paid to Vermont residents and to nonresidents for services performed in Vermont. GB-1210 sets out two adjustment rules for workers who split time across state lines.
- Nonresidents: when a nonresident works in Vermont and in another state during a payroll period, the employer computes Vermont tax on the full payment and multiplies it by the ratio of Vermont hours to total hours. The booklet's example: $48.00 on a 40-hour period with 16 Vermont hours becomes $19.20.
- Residents: when a Vermont resident is paid partly for work outside Vermont, the employer computes Vermont tax on the full payment and reduces it by the income tax withheld for the state where the work was performed.
- Movers: an employee who moves into Vermont during the year is treated as a resident for withholding.
Neighbouring states matter here. New Hampshire has no wage income tax, so a Vermont resident who works in New Hampshire has no other-state withholding to offset and stays fully withheld for Vermont, while a New Hampshire resident working in Vermont pays Vermont tax on the Vermont-source wages. Compare the New Hampshire payroll guide, the New York payroll guide, and the Massachusetts payroll guide for the other side of each commute.
Employer Payroll Obligations in Vermont
Vermont employers carry the federal employer taxes plus state unemployment insurance through the Vermont Department of Labor and the Child Care Contribution through the Department of Taxes. The federal side, covered in the employer payroll tax obligations guide, includes the matching 6.2% Social Security and 1.45% Medicare plus Federal Unemployment Tax (FUTA).
| Employer tax | Basis | Wage base (2026) |
|---|---|---|
| State Unemployment Insurance | Experience-rated (new employer 1.0% from July 1, 2026) | $15,400 per employee |
| Child Care Contribution | 0.44% (up to 0.11% may be deducted from the employee) | No cap |
| FUTA (federal, after state credit) | 0.6% | $7,000 per employee |
The Vermont unemployment taxable wage base rose from $14,800 to $15,400 on January 1, 2026. Beginning July 1, 2026, the new employer rate for most employers is 1%; out-of-state construction corporations get an industry-average new employer rate instead (1.9% for building construction, 4.0% for heavy and civil engineering, 2.7% for specialty trades). Employers move to an experience rate after at least one full calendar year of benefit liability. Vermont's minimum wage is $14.42 an hour from January 1, 2026, and the tipped base wage is $7.21. Model the combined cost-to-hire with the employer payroll tax calculator.
Vermont Supplemental Wage Withholding
Supplemental wages are payments outside regular salary: bonuses, commissions, severance, and similar payments. Vermont links its supplemental and extra withholding to the federal amount rather than publishing a separate flat rate.
- Non-periodic payments: GB-1210 says Vermont withholding can be estimated at 30% of the federal withholding. When the federal 22% flat supplemental rate applies, 30% of it works out to 6.6% of the payment.
- Periodic payments: annuities and other periodic payments are withheld from the regular Vermont tables.
- Extra federal withholding: if the federal W-4 asks for an additional amount each period, Vermont withholding should be increased by 30% of that extra amount.
- Non-qualified deferred compensation: payments previously deferred are withheld at 6%.
In every case the employee remains responsible for having enough Vermont tax withheld. Federal income tax withholding on supplemental wages is a separate calculation set by the IRS, and Social Security and Medicare still apply. For the federal supplemental math, use the Bonus Tax Calculator.
Vermont Filing and Payment Frequency
Employers register for a Vermont withholding account through myVTax or Form BR-400. The Department of Taxes assigns each employer a filing frequency based on its annual withholding totals, and returns and payments can be filed through myVTax. The Child Care Contribution is paid in the same manner and frequency as Vermont income tax withholding and reported quarterly on Form WHT-436, Quarterly Withholding Reconciliation.
Every employer files Form WHT-434, Annual Withholding Reconciliation, by January 31; it serves as the transmittal for Forms W-2 and 1099. Employers submitting 10 or more W-2s or 1099s must file electronically, and Vermont no longer participates in the Combined Federal/State program, so the forms go directly to the Department. Unemployment wages and contributions are reported quarterly to the Vermont Department of Labor. The federal deposit schedule is covered in the payroll tax deadlines guide.
How Take-Home Pay Works in Vermont
The calculation sequence runs from gross pay down to net pay. Vermont withholding applies to payments subject to federal withholding, so the same pre-tax deductions that reduce federal wages also reduce the Vermont base, but FICA rides on gross wages.
- Start with gross wages for the pay period.
- Subtract federal pre-tax deductions (401(k), Section 125 health premiums) to find taxable wages for federal and Vermont income tax.
- Apply federal income tax withholding using the Form W-4 and IRS Publication 15-T.
- Subtract the per-period value of your W-4VT allowances ($207.69 each biweekly), apply the single or married Vermont table for your pay frequency, and add any Line 6 amount.
- Subtract Social Security (6.2%) and Medicare (1.45%) and, if your employer deducts it, the Child Care Contribution share of up to 0.11%. The remainder is net pay; there is no employee unemployment line and no local wage line.
To see exact figures for a specific salary, W-4VT status, and pay frequency, use the Vermont paycheck calculator or the general take-home pay calculator for a full pre-tax benefits stack.
Vermont Payroll Quick Facts (2026)
| Income tax (withholding tables) | Graduated 3.35%–8.75% |
| Withholding method | GB-1210 per-period percentage tables |
| State withholding form | Form W-4VT |
| Allowance value | $5,400 a year ($207.69 biweekly) |
| Child Care Contribution | 0.44% employer; up to 0.11% may be deducted |
| Local wage tax | None statewide |
| Employee unemployment | None |
| UI wage base (employer) | $15,400 |
| New employer UI rate | 1.0% (most employers, from July 1, 2026) |
| Supplemental estimate | 30% of federal withholding |
| Minimum wage | $14.42; tipped $7.21 |
| Agencies | Vermont Department of Taxes, Vermont Department of Labor |
At LMN Tax Inc, the Vermont issue we see most is a missing Form W-4VT. Since the federal W-4 dropped allowances, new hires often complete only the federal form, and the Vermont Department of Taxes itself warns that withholding from federal W-4 information can come up short. Counting allowances the way the W-4VT does (yourself, a non-working spouse, dependents, head of household) moves the Vermont line by about $14 per biweekly check per allowance once wages reach the 6.6 percent band. The second recurring issue is two-earner couples on the married table: each paycheck is withheld as if it were the only income, so similar salaries can produce a balance due in April. The single-rate election or a Line 6 amount fixes it. The third thing we flag is the Child Care Contribution line. Employers decide individually whether to pass up to 0.11 percent to workers, so two people on the same salary at different Vermont employers can see slightly different net pay, and the line keeps running after Social Security stops because it has no cap.
Real-World Example: A Vermont Biweekly Paycheck
Avery earns $65,000 per year and works in Burlington. Avery is paid biweekly (26 pay periods), files Single on the W-4, uses single status on Form W-4VT with one allowance, and the employer deducts the 0.11 percent Child Care Contribution share. Avery has no pre-tax contributions. The federal figure follows the 2026 Publication 15-T method; the Vermont figure comes from the 2026 GB-1210 biweekly single table.
Gross pay per period: $65,000 / 26 = $2,500.00
| Line | Amount |
|---|---|
| Gross wages | $2,500.00 |
| Federal income tax withholding | −$216.15 |
| Social Security (6.2%) | −$155.00 |
| Medicare (1.45%) | −$36.25 |
| Vermont income tax (1 allowance) | −$77.88 |
| Child Care Contribution (0.11%) | −$2.75 |
| Net pay (2026) | $2,011.97 |
The Vermont line comes from subtracting one $207.69 allowance: $2,500.00 − $207.69 = $2,292.31, which falls in the single biweekly band starting at $2,103, so the tax is $65.39 + 6.60% × ($2,292.31 − $2,103) = $77.88. Avery's Vermont withholding is about 3.1% of gross. If Avery's employer paid the whole Child Care Contribution, net pay would be $2,014.72. Run your own numbers with the Vermont paycheck calculator.
When Vermont Withholding Logic Does Not Apply
- Married filing separately: The W-4VT has a separate-filing box, but GB-1210 prints only single and married tables. Confirm with payroll which table it applies before relying on an estimate.
- Multi-state workers: Nonresidents are withheld only on the Vermont share of hours, and residents get a reduction for other-state withholding. A single-state estimate overstates Vermont tax for these workers.
- No W-4VT on file: An employer working from federal W-4 information has no Vermont allowance count to use, and GB-1210 warns the result may under-withhold.
- Self-employed and 1099 workers: Independent contractors are not subject to Vermont wage withholding; they pay Vermont income tax and the 0.11% Child Care Contribution on self-employment income through estimated payments and the annual return, similar to the federal process in the self-employment tax guide.
- Roth and post-tax elections: A Roth 401(k) deferral does not reduce federal wages, so it does not lower the Vermont income tax base either; only traditional pre-tax deferrals do, and neither lowers FICA.
Frequently Asked Questions
If you are a Vermont employee, use the Vermont paycheck calculator to see federal withholding, FICA, the graduated state tax, and the Child Care Contribution share for your salary, W-4VT status, and pay frequency, then confirm you actually filed a W-4VT (not just a federal W-4) and that the status and allowances on your stub match it. If both spouses work, consider the higher-single-rate election or a Line 6 amount.
If you are a Vermont employer, confirm your Department of Taxes withholding account and your Department of Labor unemployment account, load the 2026 GB-1210 tables, collect a W-4VT from every employee, decide and document how much of the Child Care Contribution you will deduct, and model your full cost-to-hire with the employer payroll tax calculator and the employer payroll tax obligations guide for federal deposit and filing duties.
- Vermont Department of Taxes: GB-1210, 2026 Income Tax Withholding Instructions, Tables, and Charts (percentage method tables, allowance values, worked example, nonresident and supplemental rules)
- Vermont Department of Taxes: Form W-4VT, Employee's Withholding Allowance Certificate
- Vermont Department of Taxes: GB-1326, The Vermont Child Care Contribution
- Vermont Department of Taxes: Child Care Contribution (employer 0.44%, employee share up to 0.11%)
- Vermont Department of Taxes: Local Option Tax (1% on sales, meals, alcohol, rooms)
- Vermont Department of Labor: Unemployment Tax Rates (wage base $15,400, new employer rate 1% from July 1, 2026)
- Vermont Department of Labor: 2026 Unemployment Insurance Taxable Wage Base ($14,800 to $15,400)
- Vermont Department of Labor: Minimum wage increase, January 2026 ($14.42; tipped $7.21)
- IRS Publication 15 (Employer's Tax Guide)
- IRS Topic 751: Social Security and Medicare Withholding Rates