Exemption for Social Security Benefits

Recipients of Social Security benefits may be exempt from Vermont tax on part or all of their benefits. If you had Social Security benefits that were taxable in the current tax year as shown on your federal Form 1040, U.S. Individual Income Tax Return, then you may qualify for a Vermont exemption .

For those who are married filing jointly and civil union partner filing jointly, the exemption applies in full up to an AGI of $65,000, phases out between $65,000-$75,000, and does not apply to filers with AGI greater than or equal to $75,000. For all other filing statuses, the Vermont exemption applies in full to an AGI up to $50,000. It then phases out smoothly for filers earning between $50,000-$60,000. It does not apply to single filers with AGI greater than or equal to $60,000. The exemption reduces a taxpayer’s Vermont taxable income before state tax rates are applied.

To see if you qualify, use the worksheet in the instructions for Vermont Schedule IN-112, Vermont Tax Adjustments and Credits. If you qualify, complete, and submit Schedule IN-112 with your IN-111, Vermont Income Tax Return.

Note: A taxpayer can only claim one of the following exemptions, even if more than one applies: Social Security Exemption; Military Retirement Exemption; Civil Service Retirement System Exemption; Other Retirement System Exemption.