Complete Guide to Vermont LLC Taxes in 2025
Vermont is a small state with a complex tax landscape for LLC owners. The Green Mountain State imposes graduated income tax rates ranging from 3.35% to 8.75%, a $35 annual report fee, and a $250 minimum entity-level tax on certain business structures. Despite its relatively high top rate compared to neighboring New Hampshire (which has no income tax on earned income), Vermont offers a charming business environment with a well-educated workforce. This guide covers every aspect of Vermont LLC taxation for 2025.
How Vermont Taxes LLCs
Vermont treats LLCs as pass-through entities for state tax purposes. The LLC itself generally does not pay Vermont income tax directly. Instead, profits and losses pass through to the individual members, who report their distributive share on their personal Vermont income tax returns using Form IN-111.
For a single-member LLC, the income flows to Schedule C of the federal return and then to Vermont Form IN-111. For a multi-member LLC, the LLC files Vermont Form BI-471 (Business Income Tax Return for Pass-Through Entities) as an informational return, and each member receives a VT Schedule K-1.
Vermont does impose a $250 minimum entity tax on LLCs that are treated as corporations for tax purposes, and certain pass-through entities may also be subject to this minimum. The minimum tax applies to the entity itself, not the individual members, and is due annually regardless of income level.
Key Point: Vermont's graduated income tax ranges from 3.35% on the first $45,400 (single filer) to 8.75% on income above $229,500. Combined with the $250 minimum entity tax and $35 annual report, Vermont is a moderate-to-high tax state for LLC owners. However, the SALT PTET election can offset some of this burden at the federal level.
Vermont Income Tax Brackets for 2025
| Taxable Income (Single) | Tax Rate | Married Filing Jointly |
|---|---|---|
| $0 - $45,400 | 3.35% | $0 - $76,000 |
| $45,401 - $110,050 | 6.60% | $76,001 - $183,400 |
| $110,051 - $229,500 | 7.60% | $183,401 - $279,450 |
| Over $229,500 | 8.75% | Over $279,450 |
Vermont LLC Annual Filing Requirements
All Vermont LLCs must file an Annual Report with the Vermont Secretary of State. The fee is $35, which is affordable compared to many states. The Annual Report is due by the first day of the LLC's anniversary month -- if your LLC was formed in September, your annual report is due September 1 each year.
Vermont also requires LLCs to maintain a registered agent within the state. Failure to file the annual report or maintain a registered agent can lead to administrative dissolution of the LLC.
Vermont Tax Summary Table
| Tax Component | Rate / Amount | Notes |
|---|---|---|
| Income Tax | 3.35-8.75% | Graduated brackets |
| Annual Report | $35 | Due on formation anniversary |
| Min Entity Tax | $250 | For corps & certain entities |
| State Sales Tax | 6% | Plus 1% local option in some areas |
| Federal SE Tax | 15.3% | On 92.35% of net earnings |
Federal Taxes for Vermont LLC Owners
Vermont LLC members face the same federal tax obligations as LLC owners in every other state:
- Self-Employment Tax (15.3%): 12.4% Social Security (up to $176,100 in 2025) plus 2.9% Medicare on all earnings. Additional 0.9% Medicare surtax on earnings above $200,000 (single) or $250,000 (MFJ).
- Federal Income Tax (10%-37%): LLC pass-through income taxed at applicable marginal bracket rates.
- QBI Deduction: Up to 20% deduction on qualified business income under Section 199A.
Tax Tip: Vermont LLC owners with net income above $50,000-$60,000 should evaluate S-Corporation election. The SE tax savings can be significant, especially in a high-income-tax state like Vermont where total tax rates can exceed 40%. Use our S-Corp Tax Calculator to compare.
Vermont Sales Tax for LLCs
Vermont imposes a 6% state sales tax on tangible personal property and certain services. Some municipalities have a local option tax of 1%, bringing the combined rate to 7% in those areas. Vermont also imposes a meals and rooms tax of 9% on restaurant meals and hotel rooms, plus a 10% tax on alcoholic beverages.
Pass-Through Entity Tax Election (PTET)
Vermont offers a PTET election that allows eligible pass-through entities to pay state income tax at the entity level. This functions as a workaround to the federal $10,000 SALT deduction cap. Members receive a corresponding credit on their individual returns. The election must be made annually and can produce significant federal tax savings for higher-income LLC owners.
Vermont LLC Filing Deadlines
| Filing Type | Deadline | Extension |
|---|---|---|
| Single-Member LLC (IN-111) | April 15 | Yes, to October 15 |
| Multi-Member LLC (BI-471) | March 15 | Yes, to September 15 |
| Annual Report | Formation anniversary | No extension |
| Estimated Tax Payments | Apr 15, Jun 15, Sep 15, Jan 15 | No |
Estimated Tax Payments in Vermont
Vermont requires estimated tax payments if you expect to owe more than $500 in state income tax after credits and withholding. Payments are due quarterly using Vermont Form IN-114. The threshold is lower than many states, so even moderate-income LLC owners should plan for quarterly payments.
Vermont LLC Formation Costs
- Articles of Organization: $125 filing fee
- Registered Agent: Required; $50-$150/year for commercial service
- Annual Report: $35/year (ongoing)
- EIN: Free from the IRS
- Business Registration: Additional registration may be needed with the Vermont Department of Taxes
Vermont vs. Neighboring States for LLC Taxes
| State | Income Tax Rate | Annual Fee | Entity Tax |
|---|---|---|---|
| Vermont | 3.35-8.75% | $35 | $250 minimum |
| New Hampshire | 0% (earned income) | $100 | BPT 7.5% on biz income |
| Massachusetts | 5% flat | $500 | None |
| New York | 4-10.9% | $9 + publication | $25-$4,500 filing fee |
| Connecticut | 3-6.99% | $80 | $250 entity tax |
| Maine | 5.8-7.15% | $85 | None |
Common Vermont LLC Tax Mistakes
- Missing the Annual Report deadline: Late filing can result in administrative dissolution.
- Ignoring the $250 minimum entity tax: This applies regardless of income for qualifying entities.
- Not making estimated payments: Vermont's $500 threshold is lower than most states. Plan accordingly.
- Overlooking the PTET election: High-income LLC owners miss significant federal savings by not electing PTET.
- Not evaluating S-Corp election: Vermont's high top rate makes SE tax savings from S-Corp election particularly valuable.
- Forgetting meals and rooms tax: If your LLC operates in hospitality, the 9% meals/rooms tax is in addition to sales tax.
Vermont LLC Tax Deductions
Vermont starts with federal AGI as the base for computing state income tax, so most federal deductions carry through. Key deductions include:
- Home Office Deduction: Simplified or actual expense method
- Vehicle Expenses: 70 cents per mile (2025) or actual expenses
- Health Insurance: Self-employed health insurance is deductible above-the-line
- Retirement Contributions: SEP-IRA or Solo 401(k)
- Vermont-Specific Additions/Subtractions: Vermont requires certain modifications to federal AGI -- review Form IN-111 instructions
Dissolving a Vermont LLC
To close a Vermont LLC, file Articles of Dissolution with the Secretary of State ($20 fee). File final federal and Vermont tax returns marked as "final," settle all debts, and distribute remaining assets to members. Close your sales tax account if applicable and retain records for at least three years after the final return filing date.