Crossing a state line into or out of Vermont

Vermont taxes its residents on income earned anywhere, and taxes non-residents on work done inside it. Which return you file depends on which direction you commute.

Vermont borders 3 states. They fall into 2 different situations, and which one applies decides whether you file one return or two.

Where you file a nonresident return and claim a credit

Vermont has no agreement with Massachusetts and New York. Work in one of these and you file a nonresident return there, report the same income again to Vermont, and claim a credit for what you already paid. The credit is capped at your Vermont liability, so you are not taxed twice, the combined bill lands at roughly the higher of the two rates. On $70,000, New York costs the most at $3,665 and Massachusetts the least at $3,500, $165 between them.

Work state	Its tax	Vermont after credit	Total	Rate that governs
Massachusetts	$3,500	$0	$3,500	Massachusetts
New York	$3,665	$0	$3,665	New York

Where the work state takes nothing

New Hampshire levies no personal income tax, so there is no return to file there and no credit to claim. But Vermont still taxes the wages as a resident. The catch is withholding: an employer in New Hampshire has no state income tax to withhold, so nothing is taken out for Vermont either. The liability is real and nothing is being set aside against it, which usually means Vermont estimated payments.

What Vermont itself takes across a salary range

A single filer, taking the standard deduction. This is the figure every arrangement above is measured against, the tax Vermont charges a resident, whether the work happened inside the state or over a line:

Wages	Vermont tax	Effective rate
$45,000	$1,508	3.35%
$70,000	$3,145	4.49%
$120,000	$6,544	5.45%

Coming the other way: living in a no-income-tax state, working in Vermont

New Hampshire border Vermont and levy no personal income tax of their own. A resident of New Hampshire who works in Vermont has the simplest arrangement on this page and the least room to improve it: Vermont taxes the wages earned inside it, $3,145 on $70,000, there is no home-state return, and so there is nothing to claim a credit against. Living across a border that charges nothing does not reduce the Vermont bill by a cent.

Reciprocity cannot help either, even where Vermont has agreements: reciprocity shifts the income to the home state's return, and a state with no income tax has no return to shift it to.

What Vermont charges as your home state

Vermont taxes income on 4 graduated brackets for 2026, from 3.35% up to 8.75%. Because wages stacks on top of any other income, a second source can push part of it into the next bracket.

Vermont is one of the twelve states that still taxes Social Security benefits, which matters if you are drawing benefits alongside wages.

State income tax on wages only, 2026 rates. Not tax advice, what this does and doesn't cover.