Credits Available to Individuals

Tax credits are available to certain taxpayers at both the state and federal levels. A tax credit is a tax incentive which allows qualified taxpayers to reduce their tax liability to the state. The following tax credits are available for individuals and businesses and provide incentives to support business growth and activities in Vermont.

Vermont Charitable Contribution Tax Credit

Charitable Housing Investment Tax Credit (HITC)

Vermont Child Tax Credit

Vermont Child and Dependent Care Credit

Vermont Earned Income Tax Credit (EITC)

Elderly or Permanently Disabled Tax Credit

Vermont Farm Income Averaging Credit

Vermont Higher Education Investment Plan (VHEIP) also known as the Vermont 529 Plan (VT529)

Credit for Income Tax Paid to Another State or Canadian Province

Qualified Sale of Mobile Home Park Credit

Vermont Research and Development Tax Credit

Vermont Veteran Tax Credit

To learn more about deductions, exclusions, and other adjustments, please see Vermont taxable income .

Vermont's Charitable Contribution Tax Credit provides a 5% credit of the first $20,000 in eligible charitable contributions made during the taxable year regardless of whether taxpayers itemize on their federal tax returns. For more information, watch the video below.

Taxpayers may take the credit using Form IN-111, Vermont Income Tax Return . This is a nonrefundable credit. A nonrefundable credit may be applied to a tax liability, but it cannot exceed the amount the taxpayer owes.

Regarding what charitable contributions are eligible for the Vermont tax credit , Vermont law follows federal law 26 U.S.C. § 170 as amended by the Tax Cuts and Jobs Act (TCJA) of 2017 and the relevant regulations. The Vermont Department of Taxes recommends that taxpayers consult their tax advisers and IRS guidance for information about what charitable contributions are allowed.

It is important that taxpayers keep good records of their contributions, including receipts, canceled checks, and other documentation. Do not include documentation with tax returns. The Department may ask filers who take the credit to produce donation records.

This tax credit encourages investment in eligible housing charities. The eligible housing charity is determined by Vermont Department of Housing and Community Development .

Credit Amount: Difference between interest income that would have been received at charitable threshold rate and actual interest income received.

Credit Limit: Not to exceed 3% of average outstanding principal balance of investment during taxable year. Aggregate of charitable investment allowed outstanding in any year is limited to $5 million.

The Vermont Child Tax Credit provides financial support to full and part-year resident Vermont families with young children. This credit of $1,000 per eligible child is fully refundable and phases out as Adjusted Gross Income (AGI) increases.

Credit is available for each child on the tax return who is six years old or younger at the close of the tax year. For example: Thomas turns seven in July of 2026. Thomas’ parent(s) will not receive a Child Tax Credit for Thomas when they file their tax year 2026 return in early 2027 because Thomas was seven at the close of the 2026 tax year.

For part-year residents, the amount of the credit is prorated based on the amount of income earned or received while the taxpayer is a resident of the State of Vermont relative to the taxpayer’s total income.

Credit is reduced by $20 for every additional $1,000 in income, or fraction thereof, after the taxpayer’s AGI exceeds $125,000. The phaseout begins at the same AGI level for both single and joint filers. The credit phases out completely at $175,000 of AGI.

Vermont’s Child Tax Credit is available to all qualifying Vermont residents regardless of whether they, their spouse, or their qualified dependents have a Social Security number (SSN) or an Individual Taxpayer Identification Number (ITIN).