Taxes: 4. Vermont’s Many Taxes Explained

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The State of Vermont imposes over 30 taxes on both individuals and businesses in Vermont. Broadly speaking, these taxes are either based on income, consumption or property values. Also, certain taxes have dedicated uses under law and other taxes are fully available for discretionary government purposes.

Using a wide variety of government reports, The Informed Vermonter has attempted to identify all the taxes imposed by the state government, explain how they work, estimate the revenues generated and indicate dedicated uses, if any.

It is possible that 100% of the taxes have not been covered. If any reader is aware of a tax not specified below, kindly advice The Informed Vermonter and the page will be updated.

 

Schedule of State of Vermont Taxes

 

Tax Tax Rate Who Pays Estimated 2017 Revenue ($mm) Dedicated Use
Personal Income Tax 3.55%-8.95% Individuals 753.4
Corporate Income tax 6.00%-8.50% Corporations 86.1
Sales & Use Tax 6% Consumers 376.4 35% to Education in 2017
Motor Vehicle Purchase & Use Tax 6% of price less trade-in value Motor Vehicle Buyers 103.6 66% Transport & 34% Education
Estate Tax 16% of value in excess of $2.75mm Inheritors 16.7
Meals & Rooms Tax 9% of revenues Hotels, Restaurants… 165.3
Wine & Liquor Tax 10% of revenues Hotels, Restaurants, Bars… 19.1
Education Property Tax Residential & Non-Residential rates vary by town.   The average residential rate in 2017 was $1.527. Property Owner 1,049.1 Education
Property Transfer Tax 1.25% of value in excess of $110,000 (0.5% on Current Use Property) PLUS a 0.2% Clean Water Surcharge Property Buyer 12.6 Base tax for low-income housing. Surcharge for Clean Water
Land Gains Tax 5%-80% of gain on land held 6 years or less Land Sellers 1.5
Land Use Change 20% of full market value of developed land (10% if held in Current Use for more than 10 years) Land Seller 0.5
Uniform Capacity Tax (Solar) $4.00/kw of capacity in lieu of Education Property Tax Solar Operators 1.1 Education
Wind Power Capacity Tax .003/kwh in lieu of Education Property Tax Wind Operators 0.9 Education
Motor Fuels Tax 30 cents/gallon Fuel Consumers 96.2 Transportation
Health Care Provider Taxes Rates vary depending on type of provider (hospitals pay 6% of net patient revenues, for example)

 

Hospitals, Nursing Homes, Intermediate Care Providers, Home Health, Pharmacies & Ambulance 188.1 Health Care
Health Care Fund Contribution Assessment $158.77/quarter on uncovered employees Employers 19.1 Health Care
Health Care Claims Tax 0.8% of claims paid in Vermont Health Insurance Companies 13.7 Health Care
Cigarette Tax $3.08/pack Wholesalers Distributors 67.5 Health Care
Tobacco Taxes Various rates for snuff, smokeless tobacco and cigars Wholesalers and distributors 8.8 Health Care
Insurance Premium Tax 2% gross premiums (3% for Surplus Lines) Insurance Companies & Brokers 34.0
Captive Insurance Tax .0033% to .0072% on premiums Captive Insurance Companies 24.0
Bank Franchise Tax .000096% of average monthly deposits in lieu of income tax Banks, S&L’s… 13.2
Beverage Tax 26.5 cents/gallon up to 6%. 55 cents/gallon over 6% Wholesalers and Distributors 6.9
Fuel Gross Receipts Tax 2 cents/gallon on fuel oil and 0.75% of retail natural gas sales Sellers of Fuel 9.5 Weatherization Assistance Program
Hazardous Waste Rates vary for recycled, non-recycles, treated of landfilled Waste shippers/facility nk
Solid Waste $6/ton Waste Treatment Facilities 3.1
Railroad Tax 1% appraised value/year Railroad property owner 0.1 50% goes to the municipality
Telephone Gross Receipts Tax 3.25% to 5.25% of gross revenues Telephone Company 0.2
Telephone Personal Property Tax 2.37% of net book value/year Telephone Company 5.5
Aviation Jet Fuel Tax 6% sales tax Jet Fuel Buyers nk
Unemployment Insurance Tax 1.1% to 7.7% on wages up to $17,300 (rates vary depending on layoff record) Employers 143.1 Unemployment Insurance Fund

Sources: 1) Vermont Comprehensive Annual Financial Report Fiscal-Year 2017, 2) Joint Legislative Fiscal Office, The Tax Study 2005-2015, and 3) Agency of Administration Monthly Revenue Report as of June 30, 2017

 

Key Observations

Consumers Pay Consumption Taxes: Taxes imposed on wholesalers, distributors and retailers for cigarettes, beer, wine, liquor, motor fuel, heating oil, health care and the like are passed through to consumers in the vast majority of cases.

Many Licenses are Effectively Taxes: Motor vehicle registration fees, driving license fees, the petroleum dealers license fee and professional licensing fees, none of which are listed above, are all effectively taxes.

This Long List of Taxes is Not Unique to Vermont: Most states impose most of these taxes. However, the various tax rates differ widely. As discussed in previous Informed Vermonter articles, Vermont’s tax rates tend to lie at the high end of the spectrum.

Dedicated Taxes: Many of Vermont’s taxes have dedicated uses under law. Should the government want to cut a dedicated tax (say Education Property Taxes), either the dedicated use spending (say preK-12 Education) must go down or another revenue source must be found.

Revenue Estimates for Fiscal-Year 2017: The revenue estimates in the table are taken from the Fiscal-Year 2017 Comprehensive Annual Financial Report where the information was available. Otherwise, the revenues were taken from the June 30, 2017 Monthly Revenue Report prepared by the Agency of Administration. The accounting for items such as uncollected taxes and tax refunds due may differ between these two sources.

 

 

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