VERMONT RETIREMENT INCOME TAX · TAX YEAR 2026
Does Vermont tax Social Security and retirement income?
Vermont exempts all taxable benefits when federal AGI is $55,000 or less ($70,000 joint), a shrinking share below $65,000 ($80,000 joint) and none at higher incomes. Vermont taxes pensions and 401(k) and IRA withdrawals at its regular rates, but exempts military retirement pay when federal AGI is $125,000 or less. A single 67-year-old with $24,000 of Social Security, a $20,000 private pension and $10,000 of IRA withdrawals pays $519 in Vermont income tax for 2026.
Your estimate
- Vermont income tax
- $519.25
- Federal income tax
- $1,810.00
- Total income tax
- $2,329.25
Subtracted from Vermont income
- Social Security exemption
- $11,300.00
- Additional standard deduction (65+)
- $1,250.00
Not yet published for 2026: Additional standard deduction at 65, per person $1,250 (latest published, 2025).
The $10,000 exemption for CSRS and other government pensions without Social Security coverage (an alternative to the Social Security exemption) and the elderly credit (24% of the federal Schedule R credit) are not modeled.
Vermont tax at different retirement incomes
Vermont income tax for 2026 on a single 67-year-old with $24,000 of Social Security, and on a married couple, both 67, with $20,000 each. Half the pension and IRA income is a private pension and half IRA withdrawals, all received by one spouse in the couple.
| Pension and IRA income | Single | Married |
|---|---|---|
| $20,000 | $184 | $0 |
| $40,000 | $1,173 | $369 |
| $60,000 | $2,700 | $2,178 |
| $100,000 | $5,340 | $4,177 |
| $150,000 | $8,971 | $7,477 |
Does Vermont tax Social Security?
Partly. Vermont exempts all federally taxable Social Security benefits when AGI is $55,000 or less for single, head of household and separate filers or $70,000 or less for joint filers, and part of them below $65,000 or $80,000. At or above those limits the benefits are taxed at the regular rates.
Of the single 67-year-old's $24,000 in benefits, $11,300 is federally taxable and Vermont taxes none of it. Of the couple's $40,000, $28,100 is federally taxable and Vermont taxes $22,761 of it.
Does Vermont tax pensions?
Yes. Private pensions, and government pensions earned with Social Security coverage, are taxed in full. Military retirement pay and military survivor benefits are exempt when federal AGI is $125,000 or less, and a shrinking share is exempt up to $175,000, for every filing status. A civil service or other government pension earned without Social Security coverage has its own partial exemption, under the same income limits as Social Security and in place of it; the calculator does not model it.
State tax for a single 67-year-old with $24,000 of Social Security, a $20,000 pension of each type and $10,000 of IRA withdrawals. Excluded is the part of the pension Vermont exempts.
| Pension | Excluded | State tax |
|---|---|---|
| Private | $0 | $519 |
| Vermont government | $0 | $519 |
| Federal civil service | $0 | $519 |
| Military | $20,000 | $0 |
Does Vermont tax IRA and 401(k) withdrawals?
Yes. IRA and 401(k) withdrawals are taxed at the regular rates, with no exemption. Qualified Roth IRA withdrawals are not taxed.
With $24,000 of Social Security, $20,000 of IRA withdrawals and no other income, a single 67-year-old pays $184 in Vermont income tax for 2026.
At what age do retirement tax breaks start in Vermont?
At 65, Vermont's standard deduction rises by $1,250 (latest published, 2025) for each person 65 or older. Lower-income filers 65 or older may also claim Vermont's credit for the elderly or disabled, 24% of the federal credit, which the calculator does not model. The Social Security and military retirement exemptions have no age requirement.
State tax at each age where the rules change. The single filer has $24,000 of Social Security, a $20,000 private pension and $10,000 of IRA withdrawals; the couple, both that age, has $20,000 of Social Security each and a $30,000 pension and $20,000 of IRA withdrawals.
| Age | Single | Married |
|---|---|---|
| 64 | $561 | $1,550 |
| 65Additional standard deduction (65+) | $519 | $1,466 |
What the calculator leaves out
The $10,000 exemption for CSRS and other government pensions without Social Security coverage (an alternative to the Social Security exemption) and the elderly credit (24% of the federal Schedule R credit) are not modeled.
- The 3% minimum tax inside the Vermont formula is measured on income after the subtractions.
The calculator uses Vermont rules from the 2025 forms and instructions, the latest published.
Figures not yet published for 2026
- Additional standard deduction at 65, per person: $1,250 (latest published, 2025).
Federal tax uses the 2026 brackets, the standard deduction with the extra amount at 65, and the $6,000 senior deduction. Estimates assume no other deductions, credits or local taxes except as noted.