Does Vermont Tax Social Security?
Vermont fully exempts Social Security for AGI at or below $55,000 (single) / $70,000 (married filing jointly) — limits raised for tax year 2024 — with a partial exemption phasing out over the next $10,000 of income.
Vermont is one of only 8 states that tax Social Security benefits in 2026.
State Tax Rate
3.35%–8.75%
Who's Exempt
Exempt below $55K single / $70K joint AGI
Who is exempt from Vermont's Social Security tax?
Available Exemptions & Deductions
- Full exemption when AGI is $55,000 or less (single/head of household/married filing separately/widowed) or $70,000 or less (married filing jointly).
- Partial exemption phases out linearly over the next $10,000 of AGI (fully phased out at $65,000 single / $80,000 joint).
Key facts about Vermont and Social Security
Vermont income tax rates range from 3.35% to 8.75% — the highest top rate among the taxing states.
Vermont ($55,000 single) and Utah ($54,000 single) have the lowest income limits among the eight taxing states, so more middle-income retirees are exposed here.
Above the phase-out, the federally taxable portion (up to 85%) is taxed at ordinary Vermont rates.
Tax-smart strategy for Vermont residents
Vermont’s low thresholds and steep top rate make it the state where the claiming decision and state taxes interact hardest. Delaying benefits while drawing down pre-tax accounts in lower-income years can keep more of the benefit under the exemption once it starts.
Frequently Asked Questions
About Vermont Social Security tax
Social Security tax rules in other states, 2026
Beyond state tax: the numbers that move more
The state tax on benefits is usually a few hundred dollars a year. These decide thousands — and three of them are set in Washington, not in the statehouse.
- Optimal Social Security Strategy for Married CouplesCoordinate both records — spousal excess, survivor protection, and the claiming-age combinations that maximize the household's lifetime benefit.
- Social Security & Medicare 2027: Every Number in One PlaceCOLA, Part B, IRMAA brackets, Part D, earnings-test limits — each figure labeled official or projected, updated in place as agencies announce.
- Social Security Claiming Timing and the IRMAA LookbackOne dollar over a threshold applies the surcharge for the whole year — decided by a tax return from two years ago. How claiming feeds in.
- SECURE 2.0's Roth Catch-Up and Your Social Security TaxHow the forced-Roth catch-up rule, effective 2026, quietly changes how high earners' benefits are taxed.