Personal Income Tax
Vermont personal income tax liability is calculated as a percentage of the federal personal income tax liability. Since tax year 1994, that percentage has been 25%. For fiscal year 1998, the personal income tax is expected to constitute over 41% of total general fund revenue.
Recent History: In tax year 1982 the Vermont tax rate was 24% of the federal liability. The rate was temporarily increased to 26% for tax year 1983. It was increased to 26.5% for tax year 1985. The tax rate was lowered to 25.8% for tax year 1987 and was lowered again for tax year 1988 to 23% of federal liability. For tax year 1989 the rate was set at 25% . The rate was temporarily increased to 28% for tax year 1990. For tax year 1991, two temporary surcharges were added to the 28% base rate. The tax rate was 31% on federal tax liability between $3,400 and $13,100 and 34% on federal tax liability greater than $13,100. The surcharges were eliminated beginning with tax year 1994 and the rate of tax was lowered to 25%.
Sales and Use Tax
Vermont has a general tax on retail sales which is primarily directed at commodity transactions. The rate of taxation is 5%. Effective September 1, 1997 a new Telecommunications Sales Tax was imposed at the rate of 4.36%. The first $20.00 of monthly, residential phone service is excluded from the tax and the maximum annual Telecommunications tax liability is $10,000. For fiscal year 1998, the sales and use tax is estimated to contribute more than 24% to total fund revenue.
Among the commodities exempt from the sales tax are food, medical equipment, prescriptions, manufacturing equipment, fuel used in manufacturing and residential fuel.
Meals and Rooms Tax
Effective October 1, 1997 a tax of 9% is imposed on taxable meals and the rent of each occupancy less than thirty days in length. The liquor portion of the meals tax is 10%. For fiscal year 1998, the meals and rooms tax will generate more than 9% of total fund revenue.
Corporate Income Tax
The net income of corporations is taxed at the greater of $250.00 or the following rate schedule:
|excess over $250,000||9.75%|
The above rates became effective January 1, 1997. For fiscal year 1998, the corporate income tax is estimated to contribute 6.0% to the general fund.
Insurance companies are taxed at a rate of 2% per annum on the gross amount of premiums written in the State of Vermont, exclusive of premiums written for reinsurance. In addition, captive insurance companies are taxed based on the volume of premiums written at a rate between 0.4% and 0.075%.
A tax is imposed on all cigarettes held for sale in the State of Vermont, by any person, at a rate of 22 mills per cigarette (forty four cents per U.S. pack), effective July 1, 1995. The cigarette tax was 10 mills per cigarette from July 1, 1992 to June 30, 1995. Cigarettes are also subject to the sales tax. A tax is imposed on tobacco products at a rate of 41% of the wholesale price. The tobacco products tax was 20% of wholesale price from July 1, 1992 to June 30, 1995. The incremental revenue generated from a tax greater than 10 mills per cigarette and 20% of the wholesale price of tobacco products is dedicated to the Health Access Trust Fund.
Telephone Receipts and Property Tax
In addition to the general corporate income tax, a tax of 2.37% is levied on net book value of personal property in the State of Vermont of persons or corporations owning or operating a telephone line or business within the state. Businesses with less than $50,000 in receipts may elect to pay the gross receipts tax of 5.25% in lieu of the income and property tax.
Real Property Transfer Tax
A tax is imposed upon the transfer by deed of title to property located within the State of Vermont. The rate is 0.5% on the first $100,000 of a purchaser's principal residence and 1.25% on the amount over $100,000. For a non-principal residence, the rate on the entire amount is 1.25%.
A tax of 25% of gross revenues is assessed upon the sale of spiritous liquor.
Beverage taxes are levied on bottlers and wholesalers of malt and vinous beverages at the rates of 26.5 cents and 55 cents per gallon, respectively. Vinous beverages are also subject to the general sales tax.
Transfers of estates are taxed in an amount equal to the federal credit for state death taxes.
Electric Energy Tax
Electric generating plants of 200,000 kilowatts or more constructed in the State of Vermont after July 1, 1965 are assessed a tax of 3.5% of the value thereof, less an adjustment for local taxes as appraised by the Commissioner of Taxes.
Bank Franchise Tax
Effective August 1, 1997 the bank franchise tax, based on average monthly deposits, was increased from a rate of 0.004% to 0.0096%.
The State of Vermont has conducted lottery operations since 1978. Beginning in 1986, Vermont began participating in a Tri-State lottery with New Hampshire and Maine. Commencing July 1, 1998 all lottery revenue will be dedicated to the Education Fund.
Source: Vermont Statutes Annotated.