Grandparents, Foster Parents or People Caring for Siblings or Other Relatives

If you are a grandparent, foster parent, or someone who is caring for siblings or other relatives, the IRS urges you to check your eligibility to receive the Child Tax Credit. Check your eligibility with the Interactive Tax Assistant tool available on the IRS website.

Vermont offers tax relief to full- and part-year Vermont residents who earn income and pay dependent care expenses. If you are eligible for the federal Child and Dependent Care Credit you qualify for the state tax credit.

Credit Amount : The tax credit amount is 72% of the federal Child and Dependent Care Tax Credit.

The Vermont Child and Dependent Care Credit is fully refundable.

This tax credit seeks to provide financial assistance to seniors and persons who are disabled with little tax-exempt retirement or disability income. If you qualify for the federal Credit for the Elderly or the Disabled , you can take the respective state tax credit. This tax credit is available to elderly or permanently and totally disabled persons who meet specific qualifications:

you are age 65 or older; or

you retired on permanent and total disability and have taxable disability income, and

your income is not more than certain limits .

Credit Amount: The Vermont tax credit is 24% of the federal Credit for the Elderly or the Disabled.

Credit Limitation: You must be eligible for and receive the Federal tax credit.

This credit is nonrefundable. To find out if you qualify, please contact us .

The Vermont Veteran Tax Credit was signed into law on June 25, 2025, as part of Act 71, and is in effect for the 2025 tax year.

Any Vermont resident or part-year resident who has a discharge record or other record of separation from active duty that verifies service in the uniformed services, whose adjusted gross income is less than or equal to $25,000 is entitled to receive a $250 refundable tax credit. This credit may be claimed when the individual files their income tax returns.

For veterans with more than $25,000 but less than or equal to $30,000 of adjusted gross income, the $250 credit decreases as the veteran’s income increases. No credit is available for veterans with more than $30,000 of adjusted gross income.

This credit provides stability to farm operations. On your federal income tax return, you may be able to average some or all of the current year's farm income by spreading it out over the past three years. If you quality for the federal Farm Income Averaging Credit, you are eligible for the state tax credit. This credit is available to farmers who calculate Federal tax using Federal Schedule J .

Credit Amount: The credit amount is 24% of the federal Farm Income Averaging Credit.

Credit Limitation: You must be qualified for the federal Farm Income Averaging credit. This is a nonrefundable credit.

Vermont Higher Education Investment Plan (VHEIP) also known as the Vermont 529 (VT529) Plan. The purpose of this tax credit is to encourage savings for education expenses. Any U.S. citizen or resident alien, including the account holder, can be the beneficiary. The beneficiary must have a valid Social Security number or taxpayer identification number. Refer to Technical Bulletin 66, Credit for Vermont Higher Education Investment Plan for more information about claiming this tax credit.

Credit Amount: The credit amount is 10% of the first $2,500 contributed per taxpayer per beneficiary to a beneficiary’s account. Rollovers from another state’s qualified tuition plan into VHEIP are also eligible for this tax credit at the same rate. Only the contribution portion of a rollover is eligible toward the credit, not the earnings.

Credit Limitation: The investment must be in a 529 plan administered by Vermont Student Assistance Corporation (VSAC) . This is a nonrefundable credit against Vermont personal income tax. If funds are withdrawn for any purpose other than approved postsecondary education costs, the Vermont credit claimed for the investment of those funds will be subject to repayment. This is a non-refundable credit .