Withholding Taxes: Vermont

Federal law and guidance on this subject should be reviewed together with this section.

Author: Vicki M. Lambert, The Payroll Advisor

Summary

• Vermont residents are subject to income tax withholding on work performed both within and outside of Vermont. Vermont income tax must also be withheld from wages paid to nonresident employees for services performed in the state. See Withholding on Residents, Nonresidents and Expatriates.
• Vermont employers determine each employees' Vermont state income tax withholding using Form W-4VT, Vermont Employee's Withholding Allowance Certificate. See Employee Withholding Forms.
• The withholding rate on nonperiodic payments, such as bonuses, is calculated differently from regular wages. See Supplemental Wages.
• Each year employers must provide copies of federal Form W-2, Wage and Tax Statement, to each employee from whom any amount of Vermont income tax was withheld, or would have been withheld under the approved tables and other methods if the employee had claimed no more than one withholding allowance. See Form W-2 Reporting Requirements.
• Employers are required to keep records of wages paid and taxes withheld. See Recordkeeping Requirements.