Capital Gains Tax in Vermont

Vermont taxes capital gains as ordinary income, and its top bracket runs to 8.75%, one of the higher state rates in the country. Stacked with the federal 20% and the 3.8% NIIT, an investment property seller faces a combined ceiling of 32.5%.

Vermont's capital gains rate, broken down

The 32.5% ceiling comes from three separate pieces stacked on top of each other:

• Federal capital gains tax: 20%
• Net investment income tax (NIIT): 3.8%
• Vermont state income tax: 8.75%

Where the 1031 exchange fits

Vermont doesn't complicate the federal like-kind exchange rules with anything extra, which means a 1031 exchange defers the full 32.5% stack, federal, NIIT, and state, in one move. The catch is the same everywhere: every dollar of proceeds has to land in qualifying replacement property. Model it in the 1031 exchange calculator and track your identification and closing windows with the timeline calculator.

Things to know before you exchange

• Vermont does not require anything beyond the federal 45-day identification and 180-day closing windows.
• None of the Vermont numbers above change if you exchange into property located in a different state.