Vermont Capital Gains Tax (2026)
Vermont capital gains tax rate: Taxed as ordinary income at up to 8.75%
Vermont taxes capital gains as ordinary income. No preferential rate for long-term gains at the state level. Combined with federal rates, Vermont's high-income residents can face among the highest total capital gains tax rates in the country.
Federal Capital Gains Rates Still Apply to Vermont Residents
All Vermont residents also owe federal capital gains tax. Federal long-term capital gains rates are 0% (income up to ~$47,025 single), 15% (income up to ~$518,900 single), or 20% (above). High earners may also owe the 3.8% Net Investment Income Tax (NIIT).
Short-Term vs. Long-Term Capital Gains in Vermont
Assets held less than one year are taxed as ordinary income at federal rates (10%–37%). Assets held over one year qualify for the preferential 0%/15%/20% federal rates. Vermont taxes capital gains as ordinary income. No preferential rate for long-term gains at the state level. Combined with federal rates, Vermont's high-income residents can face among the highest total capital gains tax rates in the country.
Planning Considerations for Vermont Investors
- Tax-loss harvesting can offset gains at both state and federal levels
- Timing asset sales to control income year and bracket placement
- Vermont taxes capital gains at Taxed as ordinary income at up to 8.75% — factor this into net-of-tax return calculations
- Qualified Opportunity Zone investments can defer federal and potentially state gains
Frequently Asked Questions
What is the capital gains tax rate in Vermont?
Vermont taxes capital gains as ordinary income. No preferential rate for long-term gains at the state level. Combined with federal rates, Vermont's high-income residents can face among the highest total capital gains tax rates in the country. Federal rates (0%, 15%, 20% for long-term gains) also apply regardless of state.
Does Vermont have a different rate for long-term vs. short-term capital gains?
Vermont does not distinguish between short- and long-term capital gains — both are taxed as ordinary income at up to 8.75%. Only federal law provides preferential long-term capital gains rates.
How do I reduce capital gains tax in Vermont?
Strategies include: holding assets over one year for federal long-term rates, tax-loss harvesting to offset gains, contributing to retirement accounts (401k, IRA), investing in Qualified Opportunity Zones, and timing sales across tax years. In Vermont, capital gains are taxed at up to Taxed as ordinary income at up to 8.75%, so these strategies reduce both federal and state tax.
Is this capital gains tax calculator free for Vermont?
Yes. Enter your gain amount, holding period, and annual income. The calculator applies both federal rates (0%/15%/20% long-term) and Vermont's Taxed as ordinary income at up to 8.75% state rate to estimate your total tax owed.