Does Vermont tax Social Security? Not up to $55,000 of AGI ($70,000 joint)
Not if federal AGI is $55,000 or less ($70,000 joint). Between $55,000 and $65,000 ($70,000 and $80,000 joint) Vermont excludes a sliding share of your taxable benefits, and from $65,000 ($80,000) it excludes none. Instead of the Social Security exclusion you can choose one for certain government pensions, but not both.
The rule, in Vermont's words
The law: “If the federal adjusted gross income of the taxpayer is less than or equal to $55,000.00, all federally taxable benefits received under the federal Social Security Act shall be excluded.” In between, the worksheet divides the distance to $65,000 by $10,000 and says “Please round to the second decimal place (Example: .481 would round to .48).” The choice of exclusions: “You can choose to exempt your taxable social security income OR the income you received from a contributory annuity, pension, endowment, or retirement system of the U.S. government or a state government, including the Civil Service Retirement System.”
What Social Security adds to your Vermont tax in 2026
Each row compares Vermont's 2026 income tax with your Social Security and without it, for the same IRA or 401(k) withdrawals. The difference is what your benefits cost you in Vermont tax, through every rule at once. For the single example, the extra tax starts once IRA withdrawals pass about $37,500, where AGI passes $55,000; for the couple, about $46,000.
| IRA or 401(k) withdrawals | Federal AGI | Vermont tax, 2026 | Same, without Social Security | Extra because of Social Security |
|---|---|---|---|---|
| $0 | $0 | $0 | $0 | $0 |
| $10,000 | $10,000 | $0 | $0 | $0 |
| $20,000 | $23,500 | $194 | $194 | $0 |
| $30,000 | $41,300 | $529 | $529 | $0 |
| $40,000 | $59,800 | $1,183 | $864 | $318 |
| $50,000 | $70,400 | $2,104 | $1,199 | $904 |
| $60,000 | $80,400 | $2,764 | $1,534 | $1,229 |
| $80,000 | $100,400 | $4,084 | $2,737 | $1,346 |
| $100,000 | $120,400 | $5,404 | $4,057 | $1,346 |
| $125,000 | $145,400 | $7,169 | $5,707 | $1,461 |
| $150,000 | $170,400 | $9,069 | $7,518 | $1,550 |
| IRA or 401(k) withdrawals | Federal AGI | Vermont tax, 2026 | Same, without Social Security | Extra because of Social Security |
|---|---|---|---|---|
| $0 | $0 | $0 | $0 | $0 |
| $10,000 | $10,000 | $0 | $0 | $0 |
| $20,000 | $24,000 | $0 | $0 | $0 |
| $30,000 | $41,100 | $54 | $54 | $0 |
| $40,000 | $59,600 | $389 | $389 | $0 |
| $50,000 | $78,100 | $1,486 | $724 | $762 |
| $60,000 | $94,000 | $2,198 | $1,059 | $1,139 |
| $80,000 | $114,000 | $2,968 | $1,729 | $1,240 |
| $100,000 | $134,000 | $4,288 | $2,399 | $1,890 |
| $125,000 | $159,000 | $5,938 | $3,694 | $2,244 |
| $150,000 | $184,000 | $7,588 | $5,344 | $2,244 |
Computed with the same engine and figures as our eight-state tool: federal taxable Social Security from IRS Publication 915, the 2026 federal standard deduction including the extra amount at 65 and the senior deduction, and Vermont's rules above. No other income, itemized deductions or credits. Vermont's 2026 rate schedule, standard deduction and exemption had not been published when checked on September 17, 2026; 2025 figures are used.
Your numbers
Social Security disability benefits
The exclusion covers federally taxable Social Security benefits, and the IRS counts disability benefits as Social Security: “Social security benefits include monthly retirement, survivor, and disability benefits.”
Pensions and IRA withdrawals
Vermont taxes pensions and IRA withdrawals, apart from the government-pension option above. Above $150,000 of AGI a 3% minimum tax can apply.
2027
The $55,000 / $65,000 and $70,000 / $80,000 limits are set in the law; we know of no change for 2027. Vermont's 2026 rate schedule had not been published when we checked, so this page uses the 2025 schedule.
The other states that tax Social Security
Colorado, Connecticut, Minnesota, Montana, New Mexico, Rhode Island, Utah. All eight side by side are in the eight-state tool, and every state with its own instructions in the all-states tool. How much of your Social Security the federal return taxes is in our taxable Social Security calculator.
Rechecks and changes
- . First published.
Sources
- 32 V.S.A. Section 5830e (Social Security exclusion)
- Vermont Department of Taxes, 2025 Schedule IN-112 instructions (Retirement Income Exemption Worksheet)
- IRS Publication 915, Social Security and Equivalent Railroad Retirement Benefits
- Dollars Ahead, Retirement Tax by State (the eight-state tool and its test cases)
This page shows what published tax rules do to the example incomes. It is not tax, legal or financial advice. For a decision that matters, take your numbers to a professional licensed to advise you.