The Green Mountain State offers a stable business environment but maintains one of the more complex graduated corporate tax structures in the Northeast. For tech startups and modern enterprises, understanding recent shifts—specifically the 2024 repeal of the SaaS exemption—is critical for staying compliant. This detailed guide provides key information for entrepreneurs looking to familiarize themselves with the Vermont corporate income tax, deadlines, and sales tax.
Key Takeaways
- Graduated Corporate Rates: Vermont imposes a graduated corporate income tax ranging from 6.0% to 8.5%.
- SaaS is Now Taxable: Effective July 1, 2024, Vermont began applying its 6% state sales and use tax to remotely accessed prewritten computer software, which includes most SaaS offerings used in Vermont. Local option taxes may apply in some municipalities.
- Minimum Tax Obligations: Even corporations with no taxable income generally owe a Vermont corporate minimum tax, which ranges from $100 to $100,000, depending on Vermont gross receipts.
- Economic Nexus: Sales tax obligations are triggered if you exceed $100,000 in sales or 200 transactions in Vermont during the preceding 12 months.
If I Want To Open A Business In Vermont, What Will I Have To Do?
To start a business in Vermont, you must first register your entity with the Vermont Secretary of State. Once registered, you need to set up an account with the Vermont Department of Taxes via myVTax.
You will likely need to register for a Business Account Number to handle corporate income tax, sales and use tax, and employer withholding. If your business sells taxable goods or digital services (including SaaS), you must obtain a Vermont Sales and Use Tax License. For international founders, our guide on state taxes for foreign-owned businesses provides essential context for navigating these requirements.
Does Vermont Have an Income Tax?
Yes. Vermont imposes a corporate income tax on C-Corporations “doing business” in the state. The tax is graduated based on Vermont’s net income:
- 6.0% on the first $10,000
- 7.0% on the next $15,000
- 8.5% on income over $25,000
Vermont uses federal taxable income as the starting point for its calculation, with specific state-level adjustments.
Does Vermont Have a Franchise Tax?
While Vermont does not have a separate “franchise tax” in the way some states do, it imposes a Minimum Corporate Tax that functions similarly. Every C‑corporation must pay at least the minimum tax, which is scaled based on Vermont gross receipts, for example:
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$100 for Vermont gross receipts up to $500,000
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$500 for Vermont gross receipts between $500,000 and $1,000,000
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$2,000 for Vermont gross receipts between $1,000,000 and $5,000,000
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$6,000 for Vermont gross receipts between $5,000,000 and $300,000,000
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$100,000 for Vermont gross receipts over $300,000,000
What Triggers Vermont’s Corporate Income Tax Nexus?
Vermont business nexus triggers include both physical and economic factors:
- Physical Presence: Maintaining an office, warehouse, or inventory (including 3rd-party fulfillment like FBA) in Vermont.
- Employee Nexus: Having any Vermont-based employee, including remote workers, typically creates nexus for both income and payroll taxes.
- Economic Nexus: While Vermont has clear $100k/200 transaction thresholds for sales tax, corporate income tax nexus is broadly defined as “doing business” or deriving income from Vermont sources.
Does Having a Mailing Address in Vermont Trigger Corporate Income Tax or Registration?
A mere mailing address or registered agent usually does not trigger corporate income tax nexus. However, if that address is used for management, storing assets, or conducting any business operations, the state may determine that nexus exists.
If I Have My Business in Vermont but Live in a Different State, Will I Pay Tax?
Yes. If your business has nexus in Vermont, its income is subject to Vermont tax. For pass-through entities (LLCs, S-Corps, Partnerships), the income is apportioned to Vermont, and non-resident owners must pay Vermont individual income tax on that portion. You can explore our guide to filing for disregarded entities to see how this affects your personal liability.
If All My Activities Are Outside the U.S. and I Live Abroad, But Have a Company in Vermont, Do I Have to Pay Tax?
Domestic Vermont corporations are taxed on their apportioned income regardless of where the owners live. Foreign-owned LLCs are subject to Vermont income tax if they are doing business in Vermont or have income apportioned to Vermont under state law, regardless of whether the income is considered effectively connected income (ECI) for federal tax purposes.
Does Having an Employee in Vermont Trigger Corporate Income Tax?
Yes. Vermont is strict regarding remote work. Having a single employee working from a home office in Vermont generally establishes corporate income tax nexus for the employer.
Does Having an Independent Contractor in Vermont Trigger Corporate Income Tax?
It depends on their role. If a contractor is performing services that help establish or maintain a market in Vermont (such as sales solicitation), the state will likely claim nexus.
Does Having a Founder Living in Vermont Trigger Corporate Income Tax?
Often, yes. If a founder or officer regularly performs management or decision‑making duties from Vermont, that activity can cause the company to be treated as “doing business” in Vermont and create corporate income tax nexus, especially when combined with Vermont customers or other in‑state contacts.
If You Hold Board Meetings in Vermont, Will It Trigger Corporate Income Tax?
Occasional board meetings in Vermont can be one factor supporting a finding of nexus, particularly when combined with other in‑state activities (such as employees, property, or sales), but are not automatically determinative on their own.
Does Vermont Collect Sales Tax?
Yes. The state sales tax rate is 6%. Some municipalities also impose a 1% local option tax, bringing the total effective rate in many areas (like Burlington) to 7%.
Does Vermont Tax SaaS Income?
Yes. This is a recent and major change. Effective July 1, 2024, Vermont repealed its exemption for remotely accessed software. Vermont SaaS sales tax now applies at the 6% state rate because SaaS is classified as “prewritten computer software” regardless of how it is accessed. This is a sharp contrast to states like Wisconsin, where SaaS remains exempt.
Does Vermont Tax Online Marketplaces?
Yes. Vermont’s Marketplace Facilitator laws require platforms like Amazon, Etsy, and DoorDash to collect and remit sales tax on behalf of their sellers for all Vermont deliveries.
Does Vermont Tax Remote Software Sales?
Yes. All prewritten computer software delivered electronically or downloaded is subject to Vermont sales tax.
If I Want to Close My Business in Vermont, What Will I have to Do?
To close a business in Vermont:
1. File a final tax return (Form BI-471 or BI-476) and check the “Final” box.
2. Formally dissolve the entity with the Secretary of State.
3. Close your tax accounts via myVTax to stop future filing requirements.
When Is My Tax Return Due for Vermont?
Vermont state tax deadlines 2026 align with federal IRS dates:
- C-Corporations (Form BI-471): The 15th day of the 4th month (April 15, 2026).
- Pass-Through Entities (Form BI-476): The 15th day of the 3rd month. Since March 15, 2026, is a Sunday, the deadline is March 16, 2026.
What Happens If I File My Vermont Tax Return Late?
Late returns face a failure-to-file penalty of 5% of the tax due per month, up to 25%. If you owe tax and pay late, interest accrues at 7.75% annually for 2026. These are in addition to any federal IRS penalties.
Can You Help Me With Filing Vermont Corporate Income Tax?
Absolutely! At Cleer Tax, our dedicated team is committed to addressing the distinct requirements of your business.
We provide comprehensive tax advisory services tailored to your specific needs, covering every aspect of compliance and optimization – including helping you reduce tax liability wherever possible. Our goal is to ensure that you capitalize on every available opportunity, leaving no stone unturned when maximizing your tax benefits and minimizing any potential liabilities.
Cleer provides Corporate Income Tax Packages encompassing federal and state income tax filings for a hassle-free experience. Our accurate, affordable, and efficient financial and tax services are tailor-made for U.S. businesses and subsidiaries to help entrepreneurs do it right from the start.
We also offer monthly bookkeeping packages, which include your monthly statements. If you need help getting up to date on your books, we also offer support for companies that have fallen behind on their bookkeeping with our bookkeeping catch-up package.
If you need any help with reducing your tax liability or your company’s bookkeeping needs, feel free to contact us. For more information, you can also visit our pricing page.
