Updated September 5, 2026. Quick answer: Only above certain income levels. Vermont fully exempts Social Security below $55,000 (or $70,000 joint) of federal AGI, phases the exemption out over the next $10,000, and taxes the full federal amount above $65,000 (or $80,000 joint).
Confidence note: high. This page is scoped to Social Security taxation specifically. For the state’s full retirement-tax picture (pensions, tax rates, estate and probate), see how Vermont taxes retirement income generally.
How Vermont taxes Social Security benefits
| State personal income tax | Yes |
|---|---|
| Social Security treatment | Partly taxed, income-dependent |
| How it works | 32 V.S.A. § 5830e(a) excludes all federally taxable Social Security below $55,000 federal AGI (single/MFS/HOH/surviving spouse) or $70,000 (joint); between $55,000-$65,000 (or $70,000-$80,000 joint) the exclusion percentage shrinks proportionally, and at or above $65,000 (or $80,000 joint) no exclusion applies at all. |
| Income threshold / phase-out | Full exemption below $55,000 AGI (single/MFS/HOH) / $70,000 (joint); proportional phase-out through $65,000 / $80,000; no exemption above that. |
Coordinate this with your overall retirement plan
An adviser can help weigh how much of your Social Security income actually reaches you after state tax, whether the timing of other withdrawals affects that, and how it fits the rest of your plan, but that does not replace the numbers in your own return.
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Statute and sources
Governing citation: 32 V.S.A. § 5830e(a).
Read September 5, 2026.
Related: how Vermont taxes retirement income generally · does Vermont tax Roth conversions? · Roth conversion taxes, all 51 jurisdictions.
General information drawn from each state’s own published statutes and revenue-department guidance, not legal, tax or financial advice. Figures and exemption amounts are current as of the date in the quick answer, are set by state law, and can change by future legislation; any pending bill named on this page is not yet law. This page cannot see your own return, which governs. We are not a law firm, a tax adviser, or a fiduciary, and this is not personalized advice.