Tax Burden for Vermont Retirees:
Many people planning to retire use the presence or absence of a state income tax as a litmus test for a retirement destination. This is a serious miscalculation since higher sales and property taxes can more than offset the lack of a state income tax. The lack of a state income tax doesn‘t necessarily ensure a low total tax burden. Following are the taxes you can expect to pay if you retire in Vermont:Sales Taxes
State Sales Tax: 6% (medical items, food, equipment and fuel, residential fuel and electricity, clothing and shoes with a purchase price of $110 or less, prescription and non-prescription drugs are exempt); Local jurisdictions may add an additional 1%. Tax is 9% of prepared foods and restaurant meals and lodging. 10% on alcoholic beverages served in restaurants.Gasoline Tax:
24.5 cents/gallon Diesel Fuel Tax: 29 cents/gallon Cigarette Tax: $2.24/pack of 20Personal Income Taxes
Tax Rate Range: Low - 3.55%; High - 8.95% (Tax year 2010). For details refer to http://www.state.vt.us/tax/individual.shtml
Income Brackets: Lowest - $34,000; Highest - $373,650 Number of Brackets: 5
Personal Exemptions: Single - $3,650; Married - $7,300; Dependent - $3,650 Standard Deduction: Federal amount Medical/Dental Deduction: Federal amount Federal Income Tax Deduction: NoneRetirement Income:
Retirement Income Taxes: No exemptions, except for Railroad Retirement benefits. Out-of-state government pensions are fully taxed. Retired Military pay: Follows federal tax rules. Military Disability Retired Pay:
Retirees who entered the military before Sept. 24, 1975, and members receiving disability retirements based on combat injuries or who could receive disability payments from the VA are covered by laws giving disability broad exemption from federal income tax. Most military retired pay based on service- related disabilities also is free from federal income tax, but there is no guarantee of total protection.VA Disability Dependency and Indemnity Compensation:
VA benefits are not taxable because they generally are for disabilities and are not subject to federal or state taxes. Military SBP/SSBP/RCSBP/RSFPP: Generally subject to state taxes for those states with income tax. Check with state department of revenue office.
Vermont Tax Guidelines for Military Personnel:http://www.state.vt.us/tax/pdf.word.excel/individual/MILITARY%20PERSONNEL.pdfProperty Taxes
Real estate taxes have two components; school property tax and municipal property tax. Both taxes are billed and collected by the town or city where the real estate is located.
A statewide education tax is imposed on all nonresidential and homestead property at the following rates: (1) the tax rate for nonresidential property is $1.35 per $100.00; and (2) the tax rate for homestead property is $0.86 multiplied by the district spending adjustment for the municipality, per $100.00, of equalized education property value. The homestead property tax rate for each municipality which is a member of a school district is calculated under subsection "e" of state statute section 5405. For rates by town, refer to http://www.state.vt.us/tax/pvredtaxrates.shtml
A Homestead Declaration is no longer required to be filed each year. The declaration filed in 2010 remains on record until the homestead is sold or there is a change in the use of the homestead.
The Municipal Property Tax is based on the town's grand list and is used to fund the town's services. The rate varies in each town depending on the funds needed to operate municipal services. Eligible Vermont residents can make a claim for a rebate of their school and municipal property taxes if household income does not exceed a certain level. Generally, household incomes of $97,000 or more do not receive an adjustment. Maximum property tax adjustment for 2010 is $8,000. The rebate refunds the difference between a percentage of the claimant's household income and the eligible taxes. Eligible taxes are combined school and municipal property taxes less the education property tax payment. There is a property tax exemption for veterans. The first $10,000 (may be increased to up to $40,000 by a vote of the town) of appraisal value of the established residence of a qualifying veteran, his or her surviving spouse or child is exempt if: (a) the residence is owned in fee simple by one or jointly by a combination of them, and, a written application for the exemption is filed before May 1 of each year. For more information refer tohttp://www.state.vt.us/tax/pvrmilitary.shtmlInheritance and Estate Taxes
Although Vermont does not have an inheritance tax, it has an estate tax. Vermont Estate Tax Return must be filed if the decedent had Vermont income and filed U.S. Estate Tax Return. Federal estate tax returns are required when an estate exceeds specified gross estate values. In 2009, estates valued at more than $3.5 million will have to pay a tax.For further information, visit the Vermont Department of Taxes site http://www.state.vt.us/tax/index.shtml
or call 802-828-2865.
Jan 2011 ++]