Updated October 4, 2026. Quick answer: Yes, with a partial exclusion. Vermont law lets a filer subtract either the first $5,000 of adjusted net capital gain or “40 percent of adjusted net capital gain” from “sale of assets held by the taxpayer for more than three years”, with exclusions for residences and publicly traded stocks and bonds.
Selling your home? How the state taxes the profit, from its own tax documents: Does Vermont tax the profit from selling your home?.
The same question for dividends and interest: does Vermont tax dividends and interest.
How Vermont treats capital gains
| Item | What the documents say |
|---|---|
| Treatment | Graduated rates after a decrease of either the first $5,000 or 40% of adjusted net capital gain |
| Rates, single, 2025 | 3.35% to $49,400; 6.60% to $119,700; 7.60% to $249,700; 8.75% above $249,700 |
| 40% decrease | Assets held more than three years, except real estate used as a primary or nonprimary residence, depreciable personal property other than farm property and standing timber, and publicly traded stocks, bonds and other financial instruments |
| Cap | The total decrease may not exceed “40 percent of federal taxable income or $350,000.00, whichever is less” |
| Claimed on | Schedule IN-153, Capital Gains Exclusion Calculation |
A $50,000 long-term gain
For a $50,000 gain on an asset held more than three years that is not an excluded type, 40% is computed as $50,000 x 40% = $20,000, leaving $30,000 taxable (within the cap). Taxed wholly at 3.35%, computed as $30,000 x 3.35% = $1,005; at 8.75%, computed as $30,000 x 8.75% = $2,625.
If only the first $5,000 applies, $50,000 minus $5,000 = $45,000 is taxable.
What changes in 2026
The documents read print no 2026 rate schedule.
Federal rules
The state’s treatment sits on top of the federal one. The IRS explains the federal tax on gains in Topic no. 409, Capital Gains and Losses and Publication 550, Investment Income and Expenses.
Related: whether Vermont taxes pensions, how Vermont taxes retirement income, the capital gains tax by state table, and the federal capital gains tax calculator.
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Answer againSources
- 2025 Vermont Tax Rate Schedules: https://tax.vermont.gov/sites/tax/files/documents/TaxRateSched-2025.pdf
- 2025 Vermont Income Tax Return booklet (Form IN-111 instructions): https://tax.vermont.gov/sites/tax/files/documents/Income-Booklet-2025.pdf
- 32 V.S.A. 5811 (Definitions), subdivision (21): https://legislature.vermont.gov/statutes/section/32/151/05811
- 32 V.S.A. 5822 (Tax on income of individuals, estates, and trusts): https://legislature.vermont.gov/statutes/section/32/151/05822
Sources: the primary documents linked above, read on October 4, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the plan administrator or the agency itself is the right place to confirm anything consequential.