Effective State Income Tax Map
Vermont has a progressive income tax system: the tax rate increases as income increases. For example, income up to $56,700 is taxed at 3.55 percent, but income between $56,700 and $137,050 is taxed at a higher rate. There are three more rates for income in higher tiers. These rates apply to taxable income—that is, after exemptions, deductions and other adjustments have been taken out. See 2010 income tax rates at Vermont Transparency.
Another measure of taxes is the effective tax rate, which is the amount of taxes paid divided by a person’s income. An effective tax rate can be calculated on taxable income or adjusted gross income. Because most people know roughly how much money they make and may have trouble remembering all of their deductions and other adjustments, taxes as a percentage of adjusted gross income may be more meaningful to the average person.
The effective tax rates shown on the map are based on 2008 tax return statistics, the latest available from the Vermont Tax Department. They were calculated by dividing net Vermont income taxes reported by residents of each town by the total adjusted gross income for those residents. Generally speaking, higher effective tax rates correspond to relatively higher average incomes.
